Will Interest Rates Rise Again?
As you may be aware, on the 17th March 2022, the Bank of England increased the base rate from 0.5% to 0.75% here in the UK. This is the highest interest rates have been since pre-pandemic days and will have a significant impact on both businesses and individuals at a difficult time with rising costs such as gas and electric bills, the cost of many foods, council tax and the price of petrol and diesel at forecourts.
The rise in the base rate has resulted in increased borrowing costs for many individuals such as higher mortgage repayments, loan repayments, credit card bills, overdrafts to name but a few. Many businesses will be faced with higher borrowing costs such as commercial mortgages, loans and overdrafts. Obviously, there will be many who are on fixed rates of interest so they will not see a change in their repayments but those on the likes of variable interest rates will do so.
Unfortunately, it is forecast that interest rates will have to increase further in the UK partly due to trying to control inflation. As to what level interest rates could get to remains to be seen with varying predictions being made.
So, what can people do to try to mitigate the impact of rising interest rates? Well, those with the likes of variable rate mortgages could see if it would be potentially financially viable to switch to a fixed rate mortgage. Those with credit card debt could see if they are able to do a balance transfer to another credit card provider at a lower interest rate. Those with instant access savings who are earning a low rate of interest may wish to consider paying off some of their borrowings on which they are paying a high rate of interest.
Regrettably, it looks like we are going to go through a difficult time from a financial point of view for quite some time to come here in the UK.