Earlier today the Bank of England (BoE) announced an increase of the BoE base rate by 0.25%, moving the Bank of England base rate from 0.25% to 0.5%.
This is the first increase in the BoE base rate for over 10 years, although it was reduced in 2016 from 0.5% to 0.25% following the Brexit referendum. The rate increase effectively rolls back the post Brexit rate reduction.
We have already seen a number of high street lenders starting to follow suit with tracker and standard variable rate increases announced, it’s likely that fixed rates and other term deals are set to follow. A number of high street lenders have publicly announced they will increase rates accordingly whilst some are assessing the situation and will not make any immediate changes – Although there is uncertainty over whether the BoE will continue to increase rates over the coming years it’s likely that the majority, if not all lenders will eventually increase their interest rates inline with the Bank of England.
Whilst the rate increase should help protect the value of the pound and benefit those with savings, homeowners (mortgage payers) on a tracker or a lenders standard variable rate will likely see their monthly payments increase, it may be prudent to move onto a fixed rate sooner rather than later in order to avoid any potential future interest rate rises.
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