7 November 2017
Investment Services
The Monetary Policy Committee (MPC) justified the rate increase, with record low unemployment, growing consumer confidence and rising global economic growth being determining factors. Of the nine-strong panel, seven voted in favour of a rise, believing growth cannot accelerate much more without prices following suit.
The rate rise will see both winners and losers. Around 45 million UK savers could see a modest lift in returns and anyone considering buying an annuity will also see better deals. Some providers have already announced plans to increase saving rates in line with the interest rate rise.
Across the country, almost four million households with variable rate mortgages could feel the effect of higher interest payments, and the Bank estimates that almost two million mortgage holders have yet to experience an interest rate rise in the lifetime of their mortgage. Those with fixed rate mortgages will see no immediate rise, although higher monthly payments are probable when borrowers reach the end of their term.
Bank Governor, Mark Carney, said that while he expects banks to quickly pass on the rate rise to savers, there should not be an immediate impact on many mortgages, loans and credit cards. He also stressed that future rises in base rates will be small and the pace will be gradual.
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