Interest Rates: How do they affect you?

Yesterday interest rates were put on hold but will it stay that way? The general consensus is that we will be due one more 1/4% increase to really keep inflation under control.

 The MPC (Monetary Policy Committee) sit down once a month to discuss how to keep inflation stable and the easiest way for them to affect inflation is to change the interest rate. But how will there decision affect you, the answer is in different ways depending on your age.

For those with a mortgage that took out fixed rates 2 to 3 years ago that are shortly coming to an end it is likely to mean a hike in your interest payments of about 20% from the low that you bought into last time. This is not always easy to just absorb so you need to make sure you find the right mortgage lender, your existing lender will probably also make an administration charge if you move your mortgage elsewhere.

For those nearing retirement with personal pension plans or similar then the increased interest rates are beneficial as you could lock into an income which would be a lot higher than if you had locked when interest rates are low. Because the company you invest your savings now may well not be the current best income provider again you need to look around.

If you have money in the bank make sure you have benefited fully from the rate rises alot off banks and building socites are quick to increase the mortgage rates but slower to increase interest to savings account holders and sometimes they do not pass on the full increase.

 If you need any advice on the above areas  mentioned above contact Andrew at andrew@squareonefinancial.co.uk

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