UK interest rate raised to 0.75% – what does this mean for you?
Today, Thursday 2nd August, the Bank of England (BoE) announced a base rate rise from 0.5% to 0.75% – making it the highest rate since March 2009. The decision was widely expected and is only the second rise in over a decade.
The BoE base rate is the interest rate that BoE charge to lend money to other banks and lenders. So, it influences what borrowers pay and what savers earn.
But what does the rise in the UK interest rate mean for you?
We spoke to one of our advisers, Jamie Smith, about the potential impact this rate rise could have on you and your savings and investments.
Jamie says, “Although not life changing, today’s increase will still be welcome news for long suffering savers who are holding cash. However it is unlikely that banks and building societies will rush to apply the increases to interest rates to their savings products as quickly as they apply the increase to their mortgage and loans products. Indeed after the last rate rise in November 2017 half of savings accounts did not move at all**”.
He added, “Those people holding savings in other asset classes such as equities, bonds and property within pensions and investments, should be mindful of the impact interest rate rises can have on these. It may be worth speaking to a financial adviser to understand how your savings could be affected.”
If you’re a mortgage borrower, an increase in interest rates inevitably means you will see an increase in repayments. Those homeowners on a variable rate are likely to be affected by the rate rise, and those on a tracker mortgage will definitely be affected because it tracks the BoE base rate.
If you are on a fixed rate deal, your payments will remain on your current rate for the remainder of your fixed term and so you will be protected for now. But, when you approach the end of your term, the remortgage rates your lender offers may have risen.
If you have any concerns that you may be affected by the rate increase, it may be worth speaking to your financial and/or mortgage adviser to understand how you may be impacted.
If you do not have a financial and/or mortgage adviser and would like to find out more about how you could be affected, please contact us by phone on 0330 332 7866* or by email on firstname.lastname@example.org.
*Calls are charged at your standard landline rate.
**Source: BBC Money article 2/8/18