Despite the base interest rate increasing in November 2017 - the first increase in more than a decade - the Bank of England has announced another increase.
The new increase will see the base rate rise from 0.5% to 0.75%. Not all lenders have to follow the Bank of England’s interest rates decision, but it may affect how much interest you receive on your savings, existing debt and the cost of borrowing.
If you’re on a variable rate tracker mortgage, a standard variable rate mortgage or a fixed rate mortgage, you’re likely to see some increases in interest.
Variable rate tracker mortgages follow the Bank of England base rate, so increases will be visible immediately.
The decision for standard variable rate mortgage holders is made by the lender, so it’s likely you will see an increase, but by how much is fully dependent on the lender’s decision.
For fixed rate mortgage holders, you are likely to be affected when you reach the end of your current deal.
The news is positive for savers, as banks and building societies may increase the rates on savings accounts. As mentioned, not all lenders have to follow the Bank of England’s decision, so it would be sensible to compare rates to ensure you’re getting the best deal.
Any current fixed rate of interest loans you have won’t be affected. But if you’re thinking about lending money in future, the rates are likely to be more expensive.
Charges on overdrafts and credit cards are unlikely to be affected, but you will be given notice if they are.
The rise could be beneficial to individuals who are about to retire too, since the interest rate rise will lead to better annuity deals.
You can find out more about the new increase in interest rates on the Which? Website. If you would like help or advice on how to make the best of the new interest rates, please get in touch. Our experienced advisers will be happy to offer their assistance.