13th November 2017
For the first time in more than 10 years, the Bank of England has raised interest rates.
The official bank rate has been lifted from 0.25% to 0.5%, the first increase since July 2007. It is likely to rise twice more over the next three years, according to Bank of England governor Mark Carney. The move reverses the cut in August of last year, which was made in the wake of the vote to leave the European Union.
Almost four million households face higher mortgage interest payments after the rise, but it should give savers a modest lift in their returns.
As well as many of the country’s 45 million savers, anyone considering buying an annuity for their pension will also see better deals.
The main losers will be households with a variable rate mortgage.
Carney expects banks to pass on the rate rise to savers, but said many mortgages, loans and credit cards would not see an immediate impact.
He said that British households have been “savvy” with their finances and have mostly taken out fixed-rate mortgages, which means it will take some time before the rise has an impact on them.
The Bank estimates that almost two million mortgage holders have not experienced an interest rate rise since taking out a mortgage.
IF YOU CURRENTLY HAVE A VARIABLE RATE MORTGAGE OR A FIXED TERM MORTAGE THAT IS ABOUT TO EXPIRE – Come and talk to us, we might be able to help.