So, who are the winners and who are the losers of the recent Bank of England base rate rise.
The winners will be 45 million savers, many providers have already announced they will be increasing savings rates in line with the rise
But for at least four million households with variable rate mortgages, monthly payments are set to rise.
Those on a variable rate
There are between four and five million households currently on a variable rate.
These are the people who will be most affected, as their monthly payments will increase almost immediately.
Fixed rate mortgages
Thankfully a large majority of new mortgage loans are on fixed interest rates.
While such rates have already started to increase, in expectation of the rate hike, borrowers will see no immediate rise.
However, when such borrowers reach the end of their term, they may find they have to make higher monthly payments.
The average easy-access savings account is currently paying 0.14% in annual interest, according to the Bank of England. So, someone with £10,000 worth of savings is earning £14 a year. If the rate rise is fully passed on, they would earn an extra £25 a year, making £39 in total.
Following the Bank’s decision, Nationwide, TSB, Skipton and Yorkshire Building Society have promised to increase their variable savings rates.
If you would like to discuss this, or any anything else, contact our advisers today on 01202 937444 or visit our other websites to speak to a mortgage broker in Reading or a mortgage broker in Bournemouth