Best of the Week
Most Popular
1. Ray Dalio: This Debt Cycle Will End Soon - John_Mauldin
2.Stock Market Dow Plunge Following Fake US - China Trade War Truce - Nadeem_Walayat
3.UK House Prices 2019 No Deal BrExit 30% Crash Warning! - Nadeem_Walayat
4.What the Oil Short-sellers and OPEC Don’t Know about Peak Shale - Andrew_Butter
5.Stock Market Crashed While the Yield Curve Inverted - Troy_Bombardia
6.More Late-cycle Signs for the Stock Market and What’s Next - Troy_Bombardia
7.US Economy Will Deteriorate Over Next Half Year. What this Means for Stocks - Troy_Bombardia
8.TICK TOCK, Counting Down to the Next Recession - James_Quinn
9.How Theresa May Put Britain on the Path Towards BrExit Civil War - Nadeem_Walayat
10.This Is the End of Trump’s Economic Sugar High - Patrick_Watson
Last 7 days
Theresa May No Confidence Vote, Next Tory Leader Betting Market Analysis and Forecasts - 12th Dec 18
Gold & Global Financial Crisis Redux - 12th Dec 18
Wow Your Neighbours With the Best Christmas Projector Lights for Holidays 2018! - 12th Dec 18
Stock Market Topping Formation as Risks Rise Around the World - 11th Dec 18
The Amazing Story of Gold to Gold Stocks Ratios - 11th Dec 18
Stock Market Medium term Bullish, But Long Term Risk:Reward is Bearish - 11th Dec 18
Is a Deleveraging Event about to Unfold in the Stock Market? - 11th Dec 18
Making Money through Property Investment - 11th Dec 18
Brexit: What Will it Mean for Exchange Rates? - 11th Dec 18
United States Facing Climate Change Severe Water Stress - 10th Dec 18
Waiting for Gold Price to Erupt - 10th Dec 18
Stock Market Key Support Being Re-Tested - 10th Dec 18
May BrExit Deal Tory MP Votes Forecast, Betting Market Analysis - 10th Dec 18
Listen to What Gold is Telling You - 10th Dec 18
The Stock Market’s Long Term Outlook is Changing - 10th Dec 18
Palladium Shortages Expose Broken Futures Markets for Precious Metals - 9th Dec 18
Is an Inverted Yield Curve Bullish for Gold? - 9th Dec 18
Rising US Home Prices and Falling Sales - 8th Dec 18
Choosing Who the Autonomous Car Should Kill - 8th Dec 18
Stocks Selloff Boosting Gold - 8th Dec 18
Will Weak US Dollar Save Gold? - 7th Dec 18
This Is the End of Trump’s Economic Sugar High - 7th Dec 18
US Economy Will Deteriorate Over Next Half Year. What this Means for Stocks - 7th Dec 18
The Secret Weapon for Getting America 5G Ready - 7th Dec 18
These Oil Stocks Are a Ticking Time Bomb - 7th Dec 18
How Theresa May Put Britain on the Path Towards BrExit Civil War - 7th Dec 18
How easy is it to find a job in the UK iGaming industry? - 6th Dec 18
Curry's vs Jessops - Buying an Olympus TG-5 Tough Camera - 5th Dec 18
Yield Curve Harbinger of Stock Market Doom - 5th Dec 18
Stock Market Crashed While the Yield Curve Inverted - 5th Dec 18
Global Economic Outlook after Trump-Xi Trade War Timeout - 5th Dec 18
Stock Market Dow Plunge Following Fake US - China Trade War Truce - 5th Dec 18
Subverting BREXIT - British People vs Parliament Risks Revolution - 5th Dec 18
Profit from the Global Cannabis Boom by Investing in the Beverage Industry - 4th Dec 18
MP's Vote UK Government Behaving like a Dictatorship, in Contempt of Parliament - 4th Dec 18
Isn't It Amazing How The Fed Controls The Stock Market? - 4th Dec 18
Best Christmas LED String and Projector Lights for 2018 - Review - 4th Dec 18
The "Special 38" Markets You Should Trade ebook - 4th Dec 18
Subverting BrExit - AG Confirms May Backstop Deal Means UK Can NEVER LEAVE the EU! - 3rd Dec 18
The Bottled Water Bamboozle - 3rd Dec 18
Crude Oil After November’s Declines - 3rd Dec 18
Global Economic Perceptions Are Shifting - Asia China Markets Risks - 3rd Dec 18
Weekly Charts and Update on Equity Markets, FX Trades and Commodities - 3rd Dec 18
TICK TOCK, Counting Down to the Next Recession - 3rd Dec 18
Stock Market Key (Short-term) Support Holds - 3rd Dec 18
Stocks Bull Market Tops Are a Process - 3rd Dec 18
More Late-cycle Signs for the Stock Market and What’s Next - 3rd Dec 18
A Post-Powell View of USD, S&P 500 and Gold - 2nd Dec 18
Elliott Wave: SPX Decision Time Is Coming Soon - 2nd Dec 18

Market Oracle FREE Newsletter

How You Could Make £2,850 Per Month

Bank of England Base Rate increases to 0.50%

Personal_Finance / UK Interest Rates Nov 03, 2017 - 11:55 AM GMT

By: MoneyFacts

Personal_Finance

The Bank of England’s decision to increase interest rates from 0.25% to 0.50% marks the first increase to base rate in over 10 years, and is the result of higher inflation and persistent uncertainty surrounding Brexit. What does this mean for the average consumer?


Savings

Charlotte Nelson, Finance Expert at moneyfacts.co.uk, said:

“Today’s rate decision may see some savers jump for joy, as it marks the first positive base rate move in more than 10 years. However, savers may want to hold back on the celebration, since the link between base rate and savings rates seems to be severed.

“Savers have struggled to find a decent return with rates at rock-bottom. For example, the average easy access account stands at 0.39% today, while back in July 2007 (the last time base rate rose) it stood at a whopping 4.05%. Savings rates have finally taken a positive turn over the past year, with challenger banks stepping in to offer savers some sort of return. As a result, the average two-year fixed rate has risen from 1.09% a year ago to 1.44% today.

“Given it’s been such a long time since the market has seen a base rate rise, it is very difficult to tell whether providers will increase their rates straight away or decide to wait and see what the rest of the market does before making their move. Anyone looking for a savings deal now will need to keep on their toes and check the Best Buys to ensure they are still getting the best rate.”

Mortgages

Charlotte Nelson, Finance Expert at moneyfacts.co.uk, said:

“Competition in the mortgage market has remained high and borrowers have experienced some of the lowest rates on record. However, the speculation prior to today’s base rate rise has been causing rates to slowly creep up since September and so today’s announcement may see an end to the lowest of deals.

“Lenders have been keen to attract the attention of borrowers to protect their mortgage book in case of a rate rise, which is one of the main reasons both the cost and availability of deals has improved. Indeed, the number of mortgage deals has now increased to 4,748 from 4,151 in just one year.

“The last time the markets saw a base rate rise, in July 2007, the average two-year fixed rate stood at 6.24%, whereas today the rate is significantly lower, sitting at 2.33%. Over the same period the SVR has fallen from 7.41% to 4.60% today.

“This rate increase will have a significant impact on those currently on their Standard Variable Rate (SVR). Based on the average SVR of 4.60%, today’s rate rise represents an increase of £28.72* to monthly repayments. However, with fixed rate mortgages still low, borrowers will be significantly better off switching deals now before it may be too late.”

*Based on a £200,000 mortgage over a 25-year term on a repayment-only basis.

Pensions

Richard Eagling, Head of Pensions at moneyfacts.co.uk, said:

“The interest rate rise is good news for those on the verge of retirement who may be looking to secure an income through an annuity, as it’s likely to boost gilt yields, which underpin annuity rates. Although gilt yields have started to increase in recent weeks, they remain low on a historic basis and the increases have yet to fully feed through to annuity rates.

"A significant boost in annuity rates is long overdue, with annuity income having fallen every year since 2014. It will be interesting to see whether any rise in annuity income encourages more retirees to consider the merits of an annuity rather than simply opting for drawdown.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules