UK Interest rates rise again, from 5% to 5.25%. What does it mean for you? Plus some useful help links

Posted 4th Aug 2022
Update 2
UK interest rates will remain at 5.25% after figures revealed a slowdown in UK price rises in August.
Update 21/09/23 - Way back in August 22, the Bank of England announced that interest rates would increase from 1.25% to 1.75%, fast forward to August 23 we had a further 0.25% hike, bringing the base rate to 5.25%. Today, we expected another rate rise, but thankfully it seems to be stabilising, the UK interest rates will remain at 5.25% after figures revealed a slowdown in UK price rises in August.

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?


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.


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


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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Links and advice if you're struggling with depression, loneliness, addiction, illness, stress etc
Community Updates
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  1. Adster's avatar
    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.
    B_Marvel's avatar
    The main point is to drive down demand which will, in turn, drive down prices.

    So many have had access to cheap money, they have been buying with reckless abandonment. Now they will actually need to think twice before borrowing.

    That's the main gist of it. People are generally terrible with money and hate to live within their means so I don't think these rates to deter that many.
  2. whatyadoin's avatar
    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

    2872288751659612171.jpg (edited)
    michaelgold's avatar
    The problem is interest rates are at record lows and we still are in crisis.
    If they were higher like post 2008 the bank could cut rates to stimulate growth, now they cant.
  3. Solee's avatar
    Can't afford to buy. Can't afford to rent at this rate.

    Whelp, guess it's over for me.
    richpriest's avatar
    I know this may be a joke considering, but in case you or anyone in that position needs it, and…es/ can help.
  4. deleted1854432's avatar
    Would love someone to educate me on how raising interest rates is going make foreign countries sell their gas and oil cheaper
    simon.mackey's avatar
    Pound gets stronger so get more gas and oil
  5. Hotspur's avatar
    When is the next Bank rate review?
    mark9915's avatar
    3 Nov according to their website.

    Dates (edited)
  6. VeganPolice's avatar
    Adster's avatar
    I was young and still lived with my parents but I remember being at work and people in floods of tears unable to work because they didnt know how they were going to pay their mortgage. It wasn't fun.
  7. rossc86's avatar
    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.
    Miller256's avatar
    I give you 15 minutes before this comment is deleted but the ones taking such glee in the suffering of others remain up.
  8. Explorer101's avatar
    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. (edited)
  9. Flobbo's avatar
    So tempted to open a fixed savings account now with the rates, but WHAT IF they go up AGAIN in September
    leeroy_tmofo's avatar
    Tbh, the fact banks are even offering fixed rate savings accounts rather suggests they think rates will continue to rise.

    They don't tend to cost themselves money these banks
  10. Weekenddealer's avatar
    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.
    ddavis's avatar
    Same. I paid an early exit of about £4k a year ago in order to fix for 7 years at 1.49%. At the time, the bank tried to talk me out of it...
  11. Paulus123's avatar
    The age of the irresponsible spender is over.

    The time of the cautious saver has come. (edited)
    nocturnal74's avatar
    Nope, lending is still cheap.

    Cautious savers earning 1% in a bank account not knowing inflation is eating their pennies away at 15%
  12. Proveright's avatar
    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?
    Phr33ky's avatar
    There's a massive difference between interest rates being 16% when they were, and 5.25% now. I'd rather pay 16% on the average house price of £20k-£30k than 5.25% on average house price of between £270k-£300k!
  13. spoo's avatar
    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%.
    nocturnal74's avatar
    Now get used to the high inflation due to the central banking printing money which was why the interest rates were so low but caused the property price to climb so high.

    If you or me print money we go to jail, when the central bank prints money they call it quantitative easing or stimulus in the USA.
  14. Connect1000's avatar
    If only we had 1979 rates again
    Phr33ky's avatar
    Well if we had 1979 rates again, I'd want 1979 house prices aswell to go with it...

    I'd rather have 1979 rates on 1979 house prices, than 2023 rates on 2023 house prices currently.
  15. JustaSingh's avatar
    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.
    leeroy_tmofo's avatar
    I completely agree, our tax system is completely broken.

    67% of our 3 trillion economy goes to less than 1% of the UK population. The logic of the last 40+ years being it "trickles down".

    It sort of has, into second and third homes in my area (which has of course driven various rural housing bubbles in desirable areas). But that's about it really. So much more just disappears abroad or into international markets and private financial funds etc now.

    (That said, I do think rates are going to go a lot higher, I'm afraid.) (edited)
  16. keefly's avatar
    Fantastic news - finally starting to get a decent return on my savings
  17. Hotspur's avatar
    Do you think house prices will decrease? Especially in London. I thought after brexit house prices would decrease but it hasn't.
    Jonwillis's avatar
    Reading the comments on this estate agent site is interesting.

    Property Industry Eye: Banks are preparing for house prices to fall by a third.

    It's anything from, if you say they will crash it's a self fulfilling prophecy, vs. those saying it's going to happen.

    Even if prices don't change, inflation will ineffect be devaluing the house, so they need to rise.

    However, the cost of living crisis as it had been called is causing issues in affordability. People are taking on mortgages based on what they can afford to pay per month. Just like mobile phones, car finance,etc. The actual house price is almost irrelevant. As rates are rising, their monthly costs go up. If they cannot afford those costs, then they need to borrow less which in turn leads them to offering less as it's the maximum they can afford.
    It's this monthly payment that pushed people into interest only mortgages which started to blow up because people forgot they were 5 years away from the end but still had the original £110k loan to pay off!

    You have a seperate issue with those already in a home not looking to sell. What will they do if they remortgage next October going from a rate of 1.69 to 7.19% (just made them up) if they borrowed £200k they need to find an extra £650 a month, and that's got to come from disposable income, reduce spending, or sell up and downsize. Selling will require a buyer and whilst people still want to buy, you hit the issue above regards to affordability.

    Storm clouds are about but no one can say for certain what will happen. The government usually tries to prop it up, but any borrowing will make it worse since that's just devaluing the pound causing import costs to increase, which increases inflation which then increases increase rates. (edited)
  18. a_steve84's avatar
    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. (edited)
    Jonwillis's avatar
    That's decent rate at the moment. My friend stayed with them too but they got 4.49%.
    I'm terms of fees it all depends on the amount you borrowed, the more you borrow the more likely a fee is worth paying. You have to work out of its worth moving for a cheaper deal. There are lots of calculators out there available to help with this comparison.
    If the mortgage is already accepted, I don't see a need adding your wife to the mortgage unless you want to borrow more money, I can't see adding her would reduce the rate that they would offer and as you say it would add extra fees into the application.
  19. umair007's avatar
    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?
    SlashnBurn's avatar
    The Bank of England will have to react to the continued collapse of the pound. I can see an emergency rate rise ahead of the planned one in November. I expect to hear them outline this in the next week or two.
  20. Rona7do's avatar
    My fixed 2.13% mortgage is ending in Feb, rates by then will probably be sky high, not good
    Jonwillis's avatar
    You can renew up to 6 months in advance. You should have got a new contract sorted in August. Get a move on :-)
  21. TheCostOfLies's avatar
    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:

    Existing customer / Retention rates:

    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. (edited)
    Jonwillis's avatar
    That's good there is some hope for existing customers at Barclays. Nationwide increased existing customer rates by 0.9% and be customer by 1.2%.

    Wonder if you can do it online instead of going via a broker.

    Interesting to see there is starting to get more value is getting the LTV down. When rates were low there wasn't much between 90 to 70 LTV rates. (edited)
  22. vixmony's avatar
    Sorry for sounding dumb. Will this affect new mortgage applications?
    Mo84's avatar
    it shouldn't affect a mortgage application that is currently being processed, if you're at the offer stage the bank would normally honour the rate you were offered and would not cancel the whole thing and make you start again, unless of course the purchase falls through or something.

    If it's a totally brand new application you wil get whatever rate the bank has on offer at the time of applying.
  23. jman316's avatar
    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!
    SaturdayGigs's avatar
  24. danny.mchattie's avatar
    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.
    teethpuller's avatar
    No such thing as free money it’s all got to be paid for one way or another the government and banks have been allowed to run away with this for way too long between mortgages-credit cards-personal loans car finance has all been cheap for way too long there comes a time where this had to end and we’re all about to pay the price for it
  25. Hotspur's avatar
    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?
    keefly's avatar
  26. TheCostOfLies's avatar
    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
    Jonwillis's avatar
    3% is a great rate, my lender, nationwide wants 4.79%, it was 3.5% last week.
    Rates are clearly moving up, and the predictions are 6% in spring.

    The banks are obviously more clued up than us, but it doesn't mean they can predict the future.

    It's a gamble either way, do you go for peace of mind, or wait it out to see if you can save money.

    One way to think about it, is what can you afford the rate to goto. Because regardless of your exit fee, if the rate goes beyond your breaking point, what will you do then.

    Barclays has a calculator for it.…or/

    It's not going to be unreasonable to think mortgages will be between 5-7% going forward.
  27. Jonwillis's avatar

    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. (edited)
    Hotspur's avatar
    How reliable is this source?
  28.'s avatar
    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. (edited)
    ilovetennis's avatar
    Coventry have over 3% but limited withdrawal
  29. Hotspur's avatar
    Do you think the base rate will increase again on June 22nd? (edited)
    mark9915's avatar
    Yep because I don’t think Bailey’s hope of the rolling 12 months rate dropping will be enough to allow them to pause. Another 0.25% IMHO. (edited)
  30. villageidiotdan's avatar
    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
    MedicineBall's avatar
    50567479-PXg1m.jpgNear the top. Click the bell symbol and should turn off notifications. 

    Think I’m going to join you. Same old armchair experts on here talking absolute nonsense. 
  31. jungleboy123's avatar
    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.
    bozo007's avatar
    HUKD probably blocked these because of FCA licensing requirements for selling any personal finance product / service.
  32. Hotspur's avatar
    How much interest can you earn in a year on bonds before you get taxed on it?
    u664541's avatar
    IIRC, 20% tax payers can earn £1k in interest per year without declaring it, for 40% tax payers it’s £500. (edited)
  33. kizzzle's avatar
    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
    B_Marvel's avatar
    I don't think people are happy about what's going on( well at least it doesn't seem that way to me).

    We are just discussing the reality of the situation.

    The BOE are deploying the only countermeasures they have for situations like this.
    The price of money will go up which is going to hurt. Especially for those who have become accustomed to this current way of life.

    Mortgages are going to become much more expensive. Cars, etc.

    People will be forced to adjust as they won't have the options previously afforded to them. Prices will come down( eventually) and we'll start this game all over again.
  34. MadonnaProject's avatar
    Can someone explain why OFGEM is not putting a higher cap?
    AnotherOne's avatar
    The real elephant in the room is why are fuel and energy prices still so high when the underlying gas and oil prices have been back below their pre Ukraine invasion levels for some time now.

    This is especially true of natural gas where prices from what I can see are the same as they were in August 2021.
  35. Cipher_Choize's avatar
    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.
    Jonwillis's avatar
    As alluded to above. It's not benefits that cause the issues. Many benefits have been cut and combined to minimise it. Yes there is going to be fraud, but it's tiny compared to tax fraud like VAT, COVID loans etc. Those on benefits just get unfairly targeted IMO, "taxism" if it were a term.

    I don't want to generalise, we all started at some point. But I remember reading along time ago, that benefits work well to boost the economy, as generally the lower paid don't attempt to save and will just spend it.

    It's why having the tax free thresholds work well as they can keep more money for spending.

    But when you give money to the wealthy they just horde it like it's a competition. (edited)
  36. MORRIS_Boylan's avatar
    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.
    Azwipe's avatar
    Why would you sit in the house without a social life because you paid the mortgage off? Being mortgage free brings freedom, great feeling.
  37. Scrooge_McDuck's avatar
    One thing is for sure: the squeeze that has squoze over the last few monthsis about to get squozer.
    deleted1854432's avatar
  38. tonymgx's avatar
    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!
    nocturnal74's avatar
    Savings accounts?

    Earn 1% while inflation is 15%

  39. Early1800's avatar
    Have HDUK already implemented the Online Harms Bill?, it's impossible to post anything, even the most innocuous comment disappears whilst it is censored and banned.
  40. winemonkey's avatar
    What amazes me about Brits and housing is that they will all hunt around to save a tenner on an iPhone on HDUK but will blindly pile in and pay way over the odds for a crumbly damp Victorian house which will cost the tens of thousands extra interest over the lifetime of a mortgage. Comedy gold. (edited)
    irradiated's avatar
    not always the case, some think they must buy a brand new house for their first home and pay way more than in reality they can afford, then complain when rates rise. When we first bought it was a cheap terrace and we worked out what would happen if the rates went a few % each way to know what we could afford over the first few years. now mortgage advisors work out the most they can have base on current rates and to hell with what might happen in a year or two, same with cars and pcp, everything has to be new and then its everyone elses fault when they cant afford it
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