With the governor of the Bank of England, Mark Carney, warning of an end to the 0.5% borrowing costs, we are seeing the first real signal in a while that interest rates are set to rise. Given other market conditions as well, this is probably the most accurate prediction to date. The market will begin to react and rates will begin to move up in line with higher wholesale money costs linked to the principal interest rate measures.
Rates currently remain at record lows, with fixed mortgage rates available under 3% for up to 5 year terms. As the Bank of England base rate slides up to say 2.5%, it is expected that equivalent fixed rates will follow at a similar margin – today’s 2.99% deal would look more like 4.99% and on an average loan of £139,000 this would equate to an additional £232 in pure interest per month. Rate increases are expected to be small and gradual with the prediction of an 18 – 24 month period to normalise at the higher level.
That’s a fairly significant increase in household commitments and you should get prepared now.
What can I do to help with interest rates going up?
Low rates now have a limited shelf-life so sitting pretty on a low tracker rate or Standard Variable Rate no longer looks attractive.
Get your household cash flow in order
Find savings where you can and consider things like your car insurance, buildings and contents, travel, healthcare and life insurance costs – we can help with all of these with very attractive products and competitive rates
Reduce the interest you pay on credit cards
Take advantage of 0% interest deals where available
Any capital you have spare, use it to reduce your mortgage and other debt where possible. Take a look through our recent article on top money saving tips
The worse thing is to bury your head in the sand and do nothing unless you have large amounts of disposable income and don’t mind seeing this reduce in an increasing rate environment. Not many of our members and customers will be in this position.
We are here to help and now with 26 advisers based all around the UK – our advice is FREE – it doesn’t take long to find out what your options are and we will provide impartial advice from the whole of the market – all the deals and access to all the best rates available!