Bank of England increases interest rates again to 4.5 percent
The Bank of England has announced today a base rate rise from 4.25 percent to 4.5 percent.
In a bid to curve rising inflation, the Bank of England has today raised the base rate to 4.5 percent, the highest level since 2008.
Higher interest rates make it more expensive for people to borrow money and encourage people to save. Overall, that means people will tend to spend less.
If people spend less on goods and services overall, the prices of those things tend to rise more slowly. Slower price rises mean a lower rate of inflation.
This helps ease inflation back down towards the Bank’s two percent target by the end of the year.
However, those with a loan or mortgage charging variable interest rates might find that the cost of their repayments goes up as a result.
According to research by TotallyMoney and Moneycomms, those with a house costing £270,000 (75 percent LTV) could see their monthly payments increase by an extra £26.
This means customers will be forking out an extra £482 each month when compared to December 2021 — just before the series of hikes began.
Alastair Douglas, CEO of TotallyMoney said: “At its current level of 10.1 percent, inflation remains five times higher than the Bank of England’s target — giving the Monetary Policy Committee more reason to keep hiking the base rate.
“This signals double trouble for millions of homeowners, who in addition to covering the increasing cost of everyday essentials, are also needing to fork out thousands of pounds more each year to maintain mortgage repayments. And this is while wages remain stagnant.”
Mr Douglas suggested that Britons who may be struggling with the rise should contact their lender and ask for support.
This won’t impact one’s credit score, however, missed payments can in the worse cases lead to court action and even repossession.
Despite the consequences for mortgage holders, savers may be enjoying the best returns on cash savings for more than a decade with these rate rises.
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Some banks are offering over five percent on cash savings to help people get the most out of their money.
Savers are urged to shop around and look for the best deals available to them.
According to Money Saving Expert, top easy-access includes:
- Chip is 3.71 percent
- Shawbrook 3.65 percent
- Cynergy Bank 3.55 percent
Top linked accounts includes:
- Barclays Rainy Day Saver 5.12 percent on up to £5,000
- Santander Edge Saver four percent to £4,000
Top one-year fix includes:
- SmartSave 4.87 percent
- OakNorth 4.86 percent
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