Commenting on the decision from the Bank of England to raise interest rates to 0.5%, Tashema Jackson, money expert at uSwitch.com, says: “Despite the warnings, this first rise in interest rates for ten years could well serve as a warning call to millions of mortgage holders to get their finances in order, as many will have never experienced a rate rise and the knock on effect it has on their finances.
“Depending on the type of mortgage that homeowners hold, the increase in the Bank of England’s base rate could have an effect on mortgage repayments. For customers on a tracker rate mortgage, or a standard variable rate, there is likely to be an immediate impact. However, even for the 2.1 million people who are coming to the end of their fixed rate deal in the next 15 months, this rate rise could have implications as lenders remove their lowest fixed rate deals.
“Now could be the time to act, as it won’t just be mortgage holders who feel the pinch. We have become used to low rates and borrowed accordingly – the latest figures show a nearly 10% rise in consumer credit lending. The rise in the base rate of interest could make it harder for some consumers to service this debt, as we’ve already seen the longest 0% interest free credit card offers being withdrawn. Take a good look at your finances and consider which are the right deals for your circumstances, this can help your money go that little bit further.
“This rate rise could have an impact on all borrowers, so if you are worried about what the rate rise will do to your finances, speak to your lender and ask them what is the likely outcome. For many, the impact won’t be instant, so you still have time to get your finances in order.
“If you are really struggling and don’t know where to turn, a debt charity such as StepChange, will be able to talk you through your options.
Find out how you could save over £1,000 a year with uSwitch here.