Bank of England hikes interest rates for the first time in 10 years – what next?

It was almost a foregone conclusion that the Bank of England Monetary Policy Committee would vote to increase bank base rate today, for the first time in a decade.

Borrowers

For many mortgage customers it won’t make any difference as they will be on a fixed rate deal, so are shielded from any additional borrowing costs – at least until their fixed term comes to an end.

People on a variable rate mortgage will see their costs rise, with a £150,000 mortgage (25 years) costing around an extra £21 per month.

If you are currently on a variable rate mortgage and you are just about managing to balance the budget, it might be worth checking out the best fixed rate deals which will stop your home loan costs increasing further if there are more rate hikes to come in 2018.

There are some excellent new online broker websites where you can check out what mortgage deals you could switch to based on your circumstances – take a look at Burrow or Mortgage Gym to get an idea of what’s available – both are free and very straightforward to use.

Savers

An extra 0.25% interest on your cash savings balance isn’t going to be a life changer, but at least it’s a small step in the right direction.

Why not find out how much (or little!!!) you are currently earning with your bank or building society and see how it matches up to the current instant access and fixed rate bond best buys.

If you’re getting less than 0.50% it’s definitely time to shift your cash to a new home so that you get the benefit rather than allowing your bank or building society to take advantage.

The big question seems to be whether today’s move was just a one off shot across the bows or perhaps the first of a series of gradual increases to follow over the next couple of years.

Time will tell I guess, however for now, it may be worth taking stock of your mortgage and/or savings to see if you can get a better deal.

 

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