UK interest rate rises for the first time in more than a decade

Shaun Love Interest Rate, Mortgages

For the first time in more than 10 years the Bank of England has raised interest rates.

The official bank rate has been lifted from 0.25% to 0.5%, the first increase since July 2007.  The Bank cautioned that any future increases would be gradual and limited, but added that it stood ready to respond to changes in the economic outlook.

The move reverses the cut in August of last year made in the wake of the vote to leave the European Union.

Almost four million households face higher mortgage interest payments after the rise, but it should give savers a modest lift in their returns.

As well as many of the country’s 45 million savers, anyone considering buying an annuity for their pension will also see better deals.

The main losers will be households with a variable rate mortgage.  Of the 8.1 million households with a mortgage, 3.7 million, or 46%, are on either a standard variable rate or a tracker rate, which generally move with the official bank rate.

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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.