What does the interest rate rise mean for you?
As well all now know, the Bank of England has increased interest rates to 0.75 per cent.
It has been a long time coming, representing only the second increase in a decade.
As a rule of thumb, a rise is often seen as good for the UK's 45 million savers and bad for borrowers – including those with mortgages.
However, the first and most important point is not to panic; the direct impact of such a relatively small rise will be minimal.
Most people with larger mortgages will be on fixed deals, so there will be little impact although it may be worth fixing on a new deal sooner rather than later if rates do look as they are set to go up again.
People on variable mortgages or tracker rates – about 35 per cent of borrowers or about 3.5 million people – will face an increase.
If you are on a tracker mortgage that matches the base rate rise, an extra 0.25% adds £12 a month to a £100,000 repayment mortgage – meaning a monthly bill will rise from £449 to £461.
Many commentators think we will not see an further rises until 2019, and that the new ‘normal’ for rates will eventually stand at somewhere between two and three per cent – well below the five per cent rates common below the recession.
It will be interesting to see if our banks raise interest rates on savings accounts in line with the increase as well as on mortgages…
Read here https://www.bbc.co.uk/news/business-41831777 for more information.