For the first time in a decade the Bank of England has raised interest rates from 0.25% to 0.5% validating this with record low unemployment numbers, resilient consumer confidence and continued economic growth.
The interest rate increase while rumoured, will still come as a shock to many, with economists predicting this being the first of many interest rate rises. The Monetary Policy Committee however has said that future increases in rates would be completed at ‘a gradual pace and to a limited extent’.
So who will the interest rate increase affect?
Although the rate increase is small, it will still affect millions of homeowners. Those with fixed rate mortgages will see no change until the end of their current deal. However for those on variable rate mortgage deals, be it either the lenders standard variable rate or a tracker, their monthly payments are likely to increase.
Every mortgage lender will take a different stance on increasing their rates with many already announcing increases with effect from 1 December 2018.
Our mortgage advisers at David Allen Financial Services (Dalston) Limited offer a FREE mortgage review service, helping you to find and secure the best deal for your circumstances, by searching the whole of the market. Call 01228 711881 to arrange an appointment.
Thankfully the rise in interest rates is not all doom and gloom and is welcomed by savers with providers expected to pass on the small increase. However this small increase won’t resolve the ongoing issue whereby it continues to be more and more difficult for savers to try and increase the value of their savings with low levels of interest payable and with inflation continually rising over the last 12 months.
If the rate of inflation is higher than the rate of interest you’re receiving on your savings, then in real terms this means the value of your money will be eroded over a period of time.
However rates are still historically low and with the rate of inflation being higher than a lot of interest rates received, the value of a savers money pot is eroding over time. The objective for most investors is to achieve capital growth ahead of inflation.
Good news for those looking to achieve a ‘dream’ retirement as annuities for pensions should see better deals become available.
Our independent financial advisers are on hand to discuss how the interest rate changes affect you, offering independent financial advice and a FREE financial review. To learn more call the team on 01228 711881.
Posted: November 2nd, 2017