News Worms
News Worms

Bank of England raises interest rate for first time in 10 years

Bank of England raises interest rate for first time in 10 years

The average easy access savings account on the market paid 0.54% just before the Bank of England base rate was cut from 0.5% to 0.25% in 2016, but more recently it has fallen to just under 0.4%.

Danske Bank economist Conor Lambe said: "On its own, the increase is likely to have only a modest impact".

The Bank of England's US counterpart, the Federal Reserve, voted Wednesday to leave key interest rates unchanged.

John-Paul says: "Mortgage companies will immediately review their products and prices will gently increase, but a rate rise has been expected for so long that it's unlikely to have a massive or immediate effect". He said: "Households are generally well positioned for a rate increase".

The Bank of England raised the interest rate in Britain Thursday for the first time in 10 years.

And he emphasised that despite the significance of the first rise in rates for a decade, a low interest rate environment still prevailed. The Bank estimates that 1.5 per cent of households - about 390,000 - have mortgages that cost more than 40 per cent of their monthly pre-tax income.

"The 0.25% lift in the base rate will likely be passed on to borrowers on variable-rate mortgage deals nearly immediately-with a material effect", said Simon Gammon, managing partner at Knight Frank Finance.

It's not very much, but Stuart Farquhar at the University of Wolverhampton is anxious that, for many families, it won't take much to put them in serious financial trouble.

Thursday's decision to raise the record-low rate - which anchors mortgages and savings accounts and governs the cost of lending - to 0.5% should, act as a wake-up call, advisors warned. My concern is the impact a rise in interest rates will have on those who are just about managing.

Recent figures showed the average amount of debt per person was now £8,000 - not including mortgages, he said, and around a quarter of people said they were struggling. "Another possiblity is that people who are struggling now might want to borrow more because wages rates are falling".

"The time has come to ease our foot a little off the accelerator", Bank governor Mark Carney said.

He said: "Banks did pass on the cut to their depositors and we expect competition to push it in the opposite direction".

He added that savers were expected to benefit from the rate rise.


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