Interest rates in the UK rise again: How will this affect you?
Interest rates rise to a sky-high 4.5%
As your professional body, we are aware of the recent increase in interest rates in the UK. The Bank of England has raised the base interest rate to 4.5% to tackle inflation. This is the 12th consecutive increase since December 2021, and it has increased by 0.25% percentage points today (Thursday, 11th May).
How rising interest rates affect credit professionals
As a Credit professional, you understand the implications of this rate hike on the economy and individuals. For instance, 2.2 million people with variable-rate mortgages will experience an increase in their monthly repayments. On the other hand, savers will benefit from higher interest rates on their savings accounts, providing an excellent opportunity to build their rainy-day fund or save for a deposit on a house.
However, credit card and loan rates are often linked to the base interest rate. Hence, borrowers with these products may see an increase in their interest rates, leading to higher borrowing costs. Those on fixed-rate mortgages won’t be affected right away, but when it’s time to renew, they may face higher rates than before.
Why are interest rates rising?
One of the reasons for the interest rate hike is to combat inflation, which directly impacts the purchasing power of money. If inflation is high, the cost-of-living increases and people’s money doesn’t go as far. By raising interest rates, the Bank of England hopes to control inflation and preserve the value of people’s money.
As credit management professionals, we understand the importance of staying informed about the latest economic developments and their impact on individuals’ finances.
If you’re worried about rising interest rates
If you’re concerned about the effects of rising interest rates on your financial situation, we recommend seeking advice from a financial advisor who can guide you through the changes. CICM is always available to provide support and expertise in credit management, debt recovery, and financial risk management too, and we are here to support you.
