The Bank of England today raised the base rate from 0.5% to 0.75% - only the second rise in over a decade. Here's what it means for your finances.
The base rate is the Bank of England's official borrowing rate - ie, what it charges other banks and lenders when they borrow money - and it influences what borrowers pay and savers earn. The increase announced today follows a rise last November from 0.25% to 0.5%.
The Bank's Monetary Policy Committee (MPC) voted 9-0 to raise the rate and said that future rises "are likely to be at a gradual pace and to a limited extent".
Here are the key need-to-knows for your finances:
- Many mortgage rates will rise. If you're on a standard variable rate mortgage, your rate is very likely to go up, and if you're on a 'tracker' mortgage - which as the name suggests tracks the base rate - it definitely will. So, if you're a mortgage holder, urgently check if you can save £1,000s by remortgaging before the best deals disappear. If you're on a fix, your rate won't change for now, but when it ends and you remortgage rates may have risen.
- For savers, the rate rise is generally good news. It should push best-buy rates up on both savings accounts and ISAs, so if that happens you may be able to earn more by ditching and switching. Banks may also increase variable rates, though it's far from guaranteed.
- Loans will be mainly unaffected - though rates for new borrowers could rise. If you've a loan currently, it's almost certainly at a fixed rate, so there's no impact. But best-buy rates for new borrowers could rise soon.
Now could be the time to look at your current mortgage. We work in partnership with fully authorised and regulated mortgage advisors who can arrange the mortgage finance and insurance products for the purchase or remortgage of your property.
To speak to an advisor get in touch with your local Scottish Property Centre branch today.
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