The latest word from the Bank of England suggests interests will be rising in the next few months. Gertjan Vlieghe, of the MPC, has noted increased household spending, rising wages and higher rates of employment; to curb rising inflation the bank will look to raise the base rate. Vlieghe stated: “Until recently, I thought the appropriate response of monetary policy was to be patient, given modest growth and subdued underlying inflationary pressure. But the evolution of the data is increasingly suggesting that we are approaching the moment when Bank Rate may need to rise.”
Rates were reduced in August 2016, to 0.25%, to combat a downturn expected following the Brexit vote. The impact of Brexit so far has not been as bad as was expected. There was concern that increasing rates too soon could have a negative impact. We are now hearing that interest rate rises could come as early as November 2017!“Having said that, an interest rate hike before the end of 2017 remains far from inevitable and much will clearly depend on inflation, growth and labour market developments” (Howard Archer, chief economic adviser to the EY ITEM Club).
Those with variable interest rate mortgages will see their repayments increase, those with Fixed rates will be protected until the end of their fixed term. If you have a variable rate you will need to ensure you have a buffer in place so that you can afford monthly increases, or perhaps you could consider re-mortgaging onto a fixed rate product.
On a more positive note the interest on savings accounts should start to rise!