Unfortunately, these recent rate rises increase the cost of borrowing for many people, and in particular, the rise of the base rate will impact many mortgages.
While this is far from the highest interest rates that have been over the past 20 years, it will definitely have an impact due to the price increases on groceries, electricity, oil, and other essentials. I think most of us have already been feeling the pinch of this
Why are interest rates in the UK rising?
\"We’ve put up interest rates up to help bring inflation back down. It will take time to work.
The cost of living has risen sharply over the last year. The speed of that increase is called the rate of inflation.
It’s our job to keep the UK’s rate of inflation low. We have a target of 2%. It’s higher than that at the moment. That’s mainly because of two things:
- higher prices of goods coming from abroad
- large increases in the cost of energy
But there is also increasing pressure on prices from developments at home. These include:
- there are more job vacancies than there are people to fill them, which means employers are having to offer higher wages to attract job applicants
- businesses are charging more for their products
That’s why we’ve raised interest rates several times over the past few months.
Since December 2021, we’ve increased our key interest rate, Bank Rate, from 0.1% to 1.25%.
But it will take time to work. It’s likely that inflation will keep rising this year and start to come down next year. We expect it to be close to our 2% target in around two years.\"
How does an interest rate rise help bring inflation down?
\"When Bank Rate goes up (or down), it affects all the other interest rates in the UK, so it is a very important ‘benchmark’ interest rate for the economy as a whole.
Higher interest rates make borrowing more expensive and encourages saving. Both of those things reduce how much people spend overall. This helps to push inflation down.
But higher interest rates don’t work straight away. They take time to take full effect. So when we use them, we always look at what will happen in the economy over the next few years, not just what’s going on now.
The action we take to keep inflation low and stable is called monetary policy.
Since December 2021, we have increased our interest rate from 0.1% to 1.25%.\"
How could this affect you?
Mortgages
These are obviously very worrying times for a lot of people on top of the financial pressures of the current cost of living crisis - if you do end up struggling to pay your mortgage there are steps you can take and you should contact your mortgage provider.
Renters
While this shouldn't directly affect rental costs, it's likely buy-to-let landlords will eventually pass on higher borrowing costs to their tenants in the future
Savers
A rise in interest rates should be positive for those who are able to squirrel away some extra money in their savings account, as they should earn a little more interest each year. Unfortunately due to rising costs, and increasing energy bills most are experiencing a lack of disposable income, so there are less opportunities to save for a rainy day.
Struggling with Debt?
Don't struggle alone, and try to deal with it all by yourself. Reach out and get some help:
- Northern Ireland
- Scotland
- Wales
- England
Help with energy costs and other essentials
- Ofgem has a list of government schemes, grants and benefits to help with home energy costs.
- Citizens Advice lots of advice here including info on food banks
- Trussell Trust has an interactive map showing you foodbanks across the UK.
Help with finances
Struggling with your Mental Health?
Ever-increasing bills and a lack of support from the government can cause huge pressure for most of us, but especially those with mental health problems. Please reach out if you are struggling, below are some organisations who may be able to help you in a time of crisis (I'm sure there are many more)
News Source - Sky
News Source Bank of England
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Buyers Guides
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Links and advice if you're struggling with depression, loneliness, addiction, illness, stress etc","comment":[{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/47957562","author":{"@type":"Person","name":"Adster"},"datePublished":"2022-08-04T11:53:31.000Z","text":"I vaguely remember the rationale behind this from Ecomonics at school. But I cant see how increasing the cost of borrowing is going to help when inflation is being driven by high costs rather than increased wages."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/47957334","author":{"@type":"Person","name":"whatyadoin"},"datePublished":"2022-08-04T11:21:57.000Z","text":"about time, those on trackers have had it good for the last decade, its been coming for the last 9 months, fix rates were so low the start of this year, it made sense to me to change. Getting a fixed rate effectively an insurance against rate rises hence why usually at a premium.
the biggest hike headline is a bit of a misnomer, the end of the day interest rates are still far lower than during the credit crunch in 2008
** note this is last months Graph 1.75 now
"},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/49052186","author":{"@type":"Person","name":"Solee"},"datePublished":"2022-12-15T12:24:32.000Z","text":"Can't afford to buy. Can't afford to rent at this rate.
Whelp, guess it's over for me."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/51030631","author":{"@type":"Person","name":"uF0n"},"datePublished":"2023-09-21T13:32:01.000Z","text":"Can the title of this thread be updated... having not seen the news yet, but knowing BOE was reviewing rates today, my first reaction was that rates went up again by 0.25% today."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/47958478","author":{"@type":"Person","name":"deleted1854432"},"datePublished":"2022-08-04T14:16:27.000Z","text":"Would love someone to educate me on how raising interest rates is going make foreign countries sell their gas and oil cheaper"},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/48280876","author":{"@type":"Person","name":"Hotspur"},"datePublished":"2022-09-22T20:08:28.000Z","text":"When is the next Bank rate review?"},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/47957410","author":{"@type":"Person","name":"VeganPolice"},"datePublished":"2022-08-04T11:33:30.000Z","text":""},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/50719019","author":{"@type":"Person","name":"rossc86"},"datePublished":"2023-08-03T16:37:37.000Z","text":"Honestly, the amount of bitter older folk in here that want the younger generations to suffer is ridiculous. Aye you had a higher interest rate but your house was bought for £25k, now the same house costs £150k. Only thing interest rates going up helps is filling bankers pockets."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/50434024","author":{"@type":"Person","name":"Explorer101"},"datePublished":"2023-06-23T05:32:44.000Z","text":"
Good FD rates on raisin platform for short and long term.
I know about inflation eating into savings interest etc.. but for those sitting on cash and not actively investing can atleast get some decent interest.
All FSCS protected upto 85k in each."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/50851500","author":{"@type":"Person","name":"Flobbo"},"datePublished":"2023-08-24T15:55:28.000Z","text":"So tempted to open a fixed savings account now with the rates, but WHAT IF they go up AGAIN in September "},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/47957934","author":{"@type":"Person","name":"Weekenddealer"},"datePublished":"2022-08-04T12:55:16.000Z","text":"unfortunately, this was pretty inevitable. We fixed our mortgage for 5 years 12 months ago, kind of wishing I went for 10 years but no point crying over spilled milk.
It makes sense that this 0.5 increase is a sign of things to come and there will be many more rises on the horizon. If anything this is going to make us be a little more money smart as a society."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/47959391","author":{"@type":"Person","name":"Paulus123"},"datePublished":"2022-08-04T16:29:38.000Z","text":"The age of the irresponsible spender is over.
The time of the cautious saver has come."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/50720754","author":{"@type":"Person","name":"Proveright"},"datePublished":"2023-08-03T20:57:29.000Z","text":"Yep interest rates used to be 16%
5.25% is low, I can see it going up again twice more in the near future.
What I don't understand is how the Governor of the Bank of England has not been sacked? And why he gets a bonus?.
This Country appears to reward failure nowadays, whether it be a gong like Chris Whitty and Patrick Vallance, or severance pay like Nat West and Coutts resignations.
Even Liz Truss after crashing the economy received a pay out for being an ex PM?"},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/47958122","author":{"@type":"Person","name":"spoo"},"datePublished":"2022-08-04T13:28:00.000Z","text":"We've all gotten very used to base rates below 1% the past 14 years but this is atypical, it was inevitable they'd go back up sooner or later.
To put it into historical perspective, until the big falls in 2008, the base rate had never been below 2% in the nearly 300 years since it was introduced, hadn't been below 3.5% since the early 50s and in the entirety of the 70s, 80s and 90s it never dropped below 5%."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/50423791","author":{"@type":"Person","name":"Connect1000"},"datePublished":"2023-06-21T16:05:13.000Z","text":"If only we had 1979 rates again "},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/50436267","author":{"@type":"Person","name":"JustaSingh"},"datePublished":"2023-06-23T11:24:43.000Z","text":"I don't think people realise how serious this is. So many people have borrowed to the hilt (and SME businesses, who employ most people in the UK) with the expectation that rates would be low single digits for a long time. Folks and businesses have borrowed heavily at those very low rates (did you see the banks, politicians or economists saying don't?) and now they are getting pummeled.
Raising the interest rates already, should have reduced the inflation rate (and its a very dodgy way that they measure it in the first place, when everyone knows it is much higher in real life). But it hasn't
Interest rates aren't the only tool, the useless owned politicians could 'tax' the corporations and elites better..but they don't (+ they are more immune to 'local' interest rates, as they diversify globally and move assets around on paper).
Always more and more for the elites..and the pl ebs have to always make do and keep quiete with less and less.
People need to wake up to the fact that the likes of sunak, elite etc, for them money is like rain and air...its meaningless..they don't care if bread doubles in price, it has no impact on them."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/50428838","author":{"@type":"Person","name":"Jonwillis"},"datePublished":"2023-06-22T11:10:39.000Z","text":"Jumped to 5%
bbc.co.uk/new…222"},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/51031413","author":{"@type":"Person","name":"londonguy"},"datePublished":"2023-09-21T15:29:40.000Z","text":"robbing savers to keep the over indebted head`s a little bit above the water line.
rates should be 10% and stay there for decades."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/48319207","author":{"@type":"Person","name":"Hotspur"},"datePublished":"2022-09-28T12:50:08.000Z","text":"Do you think house prices will decrease? Especially in London. I thought after brexit house prices would decrease but it hasn't."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/49466113","author":{"@type":"Person","name":"a_steve84"},"datePublished":"2023-02-02T23:44:44.000Z","text":"I could do with some help / advice.
My fixed rate ends in April with Santander, currently its 1.65%. The best deal I can find myself and through brokers is actually to stay with Santander on their variable 2 year tracker at 4.24% with a fee of £999 (added onto the mortgage) over 25 years. I've accepted this offer, but there's no exit fees so I can look for other deals if I wanted. If I was to do nothing and take their follow on rate its over 6%.
My current monthly payment is £390 p/m and from April will go up to £519 p/m (not including todays rise).
My LTV is 44%.
I'm married, but the mortgage is in my name only. Part of the reason I stayed with Santander was because there was no need for valuations, solicitor involvement, legal fees and the 6-8 week long process etc. It's basically just a few clicks through the app.
I'm wondering if I've made the right decision? Or should I go about looking for a joint mortgage (which would include fees to add my wife to the deeds) which would take into account both our incomes rather than just mine? We also have two kids (4 and 2) which has an impact, in terms of chidcare fees etc.
Its been weighing quite heavy on my mind, I'm not sure what to do. Would love some advice.
Thanks."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/48291775","author":{"@type":"Person","name":"umair007"},"datePublished":"2022-09-24T11:12:29.000Z","text":"I see the next review is in November and I guess there maybe be another in another 3 months. I know it hard to predict with current climate, but is there any chance of interest rates going down next year? I am a bit conscious now about my fixed rates coming to an end around March/April time next year 2023 ,so not sure what would be my options... or if something I can do now. any suggestion/experience welcome? "},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/48307248","author":{"@type":"Person","name":"Rona7do"},"datePublished":"2022-09-26T17:29:28.000Z","text":"My fixed 2.13% mortgage is ending in Feb, rates by then will probably be sky high, not good"},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/48334225","author":{"@type":"Person","name":"TheCostOfLies"},"datePublished":"2022-09-30T13:59:22.000Z","text":"For anyone with Barclays looking at remortgaging or rate changing, despite them raising fixed-rate mortgages for new customers to the 4-6%+ range, existing customer mortgages are still in the 3-3.5% range, as they didn't change overnight.
New customer rates:
barclays.co.uk/content/dam/documents/personal/mortgages/CoreRangeCustomerRateSheet.pdf
Existing customer / Retention rates:
barclays.co.uk/content/dam/documents/personal/mortgages/emcrewardcustomerratesheet.pdf
Might be worth looking at your options before they are also raised.
If you're within 6 months of your fix ending, you can do this online yourself in a couple of minutes for free.
If you need to pay an ERC, You would need to rate change via a broker, as going direct via Barclays would include a 2 week wait for a callback. A broker can apply almost immediately."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/47961436","author":{"@type":"Person","name":"vixmony"},"datePublished":"2022-08-04T22:27:29.000Z","text":"Sorry for sounding dumb. Will this affect new mortgage applications?"},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/48281124","author":{"@type":"Person","name":"jman316"},"datePublished":"2022-09-22T20:42:04.000Z","text":"So come November, is the interest rate expected to fall?
Enquired about a mortgage recently and I was given a rate of 3.3% from Halifax via a mortgage broker!"},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/48293569","author":{"@type":"Person","name":"danny.mchattie"},"datePublished":"2022-09-24T16:15:36.000Z","text":"Markets are boom and bust for a reason and that reason is heard mentality. When a market is rising FOMO kicks in and it’s like nothing can stop it - buy now before it’s too late - everyone wants a piece of the action. When they drop it’s a rush for the exit and a downward spiral - get out now before it’s too late. When the base rate is 4% (probably by the end of the year) and a bank comes along and offers an all
singing and dancing 5% current account, which they will, why would anyone risk investing in property or stocks. You’d want a 7-8% return minimum to make the capital risk worthwhile. But then add to that falling markets, where you’d be lucky not to lose 5%, you’ve got 2 markets which at current prices investors won’t even look at until they retrace. So that’s the majority of PI stock market investors put and 14% of the housing market (property investors) gone in an instant. The cost to borrow (property/mortgage) is becoming significantly higher. The number of distressed sellers increasing. The only thing going for these at the moment is the incredibly weak £ attracting foreign investment. But anyone who understands simple economics and supply/demand knows what’s coming."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/48318075","author":{"@type":"Person","name":"Hotspur"},"datePublished":"2022-09-28T10:13:35.000Z","text":"As I'm looking to buy and be a first time buyer is it best to wait and build up on the savings and do short term fixed rates atm?"},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/48325549","author":{"@type":"Person","name":"TheCostOfLies"},"datePublished":"2022-09-29T10:10:30.000Z","text":"Our 1.98% fix comes to an end in July 2023, so the earliest I can fix without a fee is Feb 23.
To fix a new rate now would cost the early close fee (almost £3,800), and potentially a fee for the new fix (usually £750-999)
The cheapest available deal as an existing Barclays customer is 3.05% + £750 for 10 years, or 3.18% + £999 for 5 years.
So I can risk waiting until Feb and hope that the saved fees can offset the rise in interest rate over the following 60+ months, or accept the upfront loss and settle in for the long haul.
DECISIONS!!! Absolute nightmare"},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/48328973","author":{"@type":"Person","name":"Jonwillis"},"datePublished":"2022-09-29T18:21:50.000Z","text":"
mobile.twitter.com/EdConwaySky/status/1572975559449407489
Found this in Twitter, obviously a trust worthy source but it's showing rate prediction per Boe meeting. Estimated 4.75% in December, 5.75% march, 6.25% August. Then tag on 0.5-2% as the actual mortgage rate.
Estimates match in with alot of other articles online based on current market conditions."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/49475470","author":{"@type":"Person","name":"harvey.ba.mba"},"datePublished":"2023-02-04T09:04:48.000Z","text":"I have some money with Santander at 2.75%…is there any news of them increasing their rate? Or is is best to move the money to Atom asap?
thank you."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/50168853","author":{"@type":"Person","name":"Hotspur"},"datePublished":"2023-05-12T19:26:34.000Z","text":"Do you think the base rate will increase again on June 22nd?"},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/50566872","author":{"@type":"Person","name":"villageidiotdan"},"datePublished":"2023-07-12T11:36:35.000Z","text":"How do you unsubscribe from a thread on hotukdeals please? I seem to only find the option sporadically.
I'm keen not to have my inbox full of people talking up a storm"},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/50716187","author":{"@type":"Person","name":"jungleboy123"},"datePublished":"2023-08-03T09:51:56.000Z","text":"At some point we were getting some finance (saving) deals on here... wonder if these will pop up again? The worst thing we can have is people with debt struggling but also banks not passing rates onto savers."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/50852146","author":{"@type":"Person","name":"Hotspur"},"datePublished":"2023-08-24T17:37:32.000Z","text":"How much interest can you earn in a year on bonds before you get taxed on it?"},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/47958396","author":{"@type":"Person","name":"kizzzle"},"datePublished":"2022-08-04T14:03:04.000Z","text":"Odd comments here - almost as if some are gleefully happy about it ( it was inevitable - serves them right / about time etc) There's something seriously wrong with society in this country and this race to the bottom is only going to drag everyone down with it.
Don't worry though the tories will cut business rates even lower - because doing that for the last 10 or so years has really done the trick hasn't it. sadly the turkeys will keep voting for christmas"},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/47958094","author":{"@type":"Person","name":"MadonnaProject"},"datePublished":"2022-08-04T13:24:15.000Z","text":"Can someone explain why OFGEM is not putting a higher cap?"},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/49832577","author":{"@type":"Person","name":"Cipher_Choize"},"datePublished":"2023-03-24T09:48:22.000Z","text":"Why can't government stop giving benefits or cut the benefits to the people who do not want to work in this country. they don't pay any taxes and work on cash on hand jobs. If they do it will resolve most of the problem . NHS should be private like other countries, as people are taking advantages of this system. Everyone knows this and still nobody is taking any actions to resolve the problem which we are facing now."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/47958967","author":{"@type":"Person","name":"MORRIS_Boylan"},"datePublished":"2022-08-04T15:23:41.000Z","text":"I know this statement will probably not sit well with some. However I remember asking a friend financial adviser should I pay off the £65k I owed on my mortgage. He said only if you wish to sit in the house and not have a social life and when I had paid it ask the mortgage company to lend it to me. He told me they would show me the door. I’m so glad I took his advice. Basically what he was saying. Asset rich Cash poor. Thank goodness I have the best of both worlds."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/47958781","author":{"@type":"Person","name":"Scrooge_McDuck"},"datePublished":"2022-08-04T14:57:51.000Z","text":"One thing is for sure: the squeeze that has squoze over the last few monthsis about to get squozer."},{"@type":"Comment","@id":"https://www.hotukdeals.com/comments/permalink/47959054","author":{"@type":"Person","name":"tonymx"},"datePublished":"2022-08-04T15:36:20.000Z","text":"Its going to be a cold winter for some people. Though I bet it takes a long time to pass on the increase on savings accounts!"}],"commentCount":3139,"interactionStatistic":318,"articleSection":"Misc"}