The Bank of England raised the base rate by 0.25% in November 2017, the first rate rise for more than 10 years……but what will happen to interest rates in 2018.
A poll by Reuters shows that 32 of 57 Economists tipped the Bank of England to increase interest rates in May.
The Bank of England kept Bank Rate at 0.5 per cent in February but said that rates were likely to rise faster than previously expected due to a strong economy and inflation.
November’s rate rise provided an immediate boost to many cash savers, although some providers have failed to pass on the full 0.25% increase to their customers.
If your mortgage repayments are affected by an interest rate change will depend on what type of mortgage you have and when your current deal ends.
If you have a variable rate tracker mortgage, linked to the BoE base rate you are likely to see an immediate rise in your mortgage repayments if there is an interest rate rise.
Those on standard variable rate mortgage will probably see an increase in their rate in line with an interest rate rise. How much is decided by your lender, so this isn’t guaranteed. If you are unsure, check your mortgage terms and conditions in your original mortgage offer
It’s a good idea to have a financial plan in place to deal with any potential interest rate changes. Current forecasts indicate that changes are likely to be small, but steady, so while a 0.25% rate rise might seem too bad, several rate raises could have a significant impact.
The table shows how much more you’d have to pay on a £200,000 mortgage (where the current interest rate is 2.5% and monthly repayments are £897) if interest rates increase.