Published: Sun, November 05, 2017
Markets | By Erika Turner

Hope for savers following Bank of England base rate rise

Hope for savers following Bank of England base rate rise

Meanwhile, Bank of England Governor Mark Carney has justified the rate rise, saying: "This is part of ensuring that it (the income squeeze) doesn't come back and ensuring that inflation comes back to the two per cent target in a sustainable manner".

Lewis shared his fears that the move could provide cover for big lenders to sneak through their own hikes.

She would still recommend to clients thinking about borrowing to lock into a fixed-rate mortgage given this is likely the first of several gradual increases to the base rate, she said. "New fixes [fixed-rate mortgages] are already a tad costlier as the market's anticipated rate rises; yet for now, deals are still incredibly cheap". Rates have dropped significantly from a high of 5.7 percent in 2007. My concern is the impact a rise in interest rates will have on those who are just about managing. He was advised to "lock-in" the record-low rate with a fixed product over the summer.

Shaun Church, director at mortgage broker Private Finance, recommended that homeowners with a fixed-rate mortgage look to extend terms of their loan. "That advice has paid off".

The pound fell on the news of the rate hike by 1.3% against the US dollar and closed at$1.3067 Thursday.

Charities have warned higher mortgage payments could lead the poorest into a vicious cycle of debt.

He said: "Banks did pass on the cut to their depositors and we expect competition to push it in the opposite direction".

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It is really disappointing because with inflation where it is, savers need all the help they can get'.

For every £20 of extra interest...

He told HuffPost UK: "The hike only returns Bank Rate to the level prevailing before the Brexit vote last year, and, given the uncertainties ahead, rates are only likely to rise gradually and to a limited extent, if at all, in the years ahead".

The rise in rates will also impact savings accounts, with better deals expected.

He added that savers were expected to benefit from the rate rise.

Richard Beresford, chief executive of the National Federation of Builders, said: "The interest rate rise will give SMEs more leverage when chasing late payments, but there is still some way to go".

The interest rate hike is less relevant to the prime market, however, since luxury buyers tend to pay all cash.

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