Interest rates won’t be going up any time soon, according to Bank of England governor Mark Carney.

Mr Carney says now is not the right time to hike rates and he claims policymakers are in no rush to raise them from their historic low of 0.5%.

Stephanie McMahon, Head of Research at Strutt & Parker said: “We had expected that the Bank of England (BoE) would raise interest rates in the first half of 2016 so this is an interesting development and the lack of movement will be welcome news for those with mortgages.

In the longer term a normalisation of rates indicates a healthy economy. There is real concern, however, that rate increases albeit in incremental shifts, will put pressure on the individual’s borrowing most especially on interest-only mortgages. Although the vast majority of recent lending (75%-80%) has been at fixed rates, there will be some who struggle with changing payment requirements.”

World and UK economies

The announcement comes at a time when financial markets have plunged due to falling oil prices and China's economic slowdown.

Speaking at Queen Mary University of London, Mr Carney said the economic outlook has changed drastically since his summer prediction that a decision on rate rises would happen at the end of 2015.

He says with a weaker world economy and slow UK growth, interest rates will stay very low for longer.

Some financial analysts are now predicting that a rise in interest rates won’t happen until 2017.

Official figures show inflation in the UK hit 0.2% in December, but fell to zero for 2015 from 1.5% in 2014 - the lowest annual reading since records began.

It’s likely to remain below the Bank's 2% target until at least next year.

Good news for homeowners

While the slowdown of the UK economy is bad news, the suggestion that interest rates will stay at historically low levels for another year is encouraging for homeowners.

Figures show that roughly a million mortgage holders have only ever borrowed when the interest rate was around 0.5%. If the rate was to rise, these people could be faced with an increase in monthly payments.

But with rates on hold, people looking to re-mortgage their home or move up the ladder should still be able to find good deals on mortgages, with monthly payments remaining low.

For those on non-fixed rate mortgages (around 56% of all homeowners) it’s also good news as it means their monthly payments will remain low.

Simon Checkley, Managing Director of mortgage broker Private Finance says:

‘Whilst Mr Carney’s decision to extend a low interest rate environment paints a rather gloomy picture for the economy in general, it is obviously extremely good news for homeowners and first time buyers. Mortgage rates are set to remain low and buyers can look forward to gaining access to some very attractive finance such as 2.18% on a five year fixed rate. A combination of cheap finance, incentive schemes such as Help to Buy and a focus on delivering affordable housing; as prioritised by the Chancellor in his latest Autumn Statement, will all play a vital role in ensuring the buoyancy of this year’s property market. All these factors mean there really is no time like the present for homeowners to consider all their options for re-mortgaging their properties or for would be buyers to take a look at what is on the market.”

The weak base rate will also help shoppers who borrow using credit cards and loans.

But it means that for many of those with large sums of money in the bank, ISAs or pensions, they’ll see little return on their investment.