The Bank of England (BoE) has kept interest rates at 5.25% today, November 2.
Since December 2021, the BoE has raised key interest rates 14 times to combat high inflation. While inflation remained unchanged at 6.7% in September, a slowing UK jobs market prompted the BoE to keep interest rates steady.
The outlook for the rest of the year looks more positive, with inflation expected to fall to 5% by the end of the year.
However, the Bank of England has downgraded the UK’s economic forecast for 2024 with zero expected growth, but this forecast could change in the future.
We’ll now explore what this interest rate decision in the UK means for you and your money.
See the latest interest rate announcement here.
Will the latest decision affect my mortgage?
There is some good news for mortgage holders, especially those with variable rate mortgages, as increases in base rates often lead to increases in interest rates.
“The rate freeze is good news for the 2.2 million homeowners with variable rate mortgages who are struggling through a cycle of 14 increases,” said Myron Jobson, senior specialist. interest rates continuously, causing their monthly debt obligations to skyrocket.” Financial analyst at interactive investor.
“That means their interest payments will remain steady, which may give them some relief.”
If you have a fixed-rate mortgage, interest rates were already falling before today’s decision, so your mortgage could be cheaper.
Some fixed-rate mortgages have recently dropped below 5%, but this is still high by historical standards.
If you’re looking to get on the property ladder, the outlook is worrying as buying your own home is set to become more expensive – and prices have recently fallen.
According to Lloyds, UK house prices are predicted to fall until 2025, as higher borrowing costs hit the housing market.
Mortgage approvals fell in September, while mortgage approvals hit their lowest level since January 1999 as the real estate market came under more pressure.
You may be denied a mortgage if the lender doesn’t think you can afford it or you have a poor credit history (for example, you’ve missed or late payments).
Other reasons for rejection include too much debt or too many credit checks. You should speak to a broker who can help you increase your chances of successfully applying for a mortgage, depending on your circumstances.
Click below to find a regulated mortgage broker.
Will the latest decision affect my savings?
Savers have benefited from rising interest rates over the past few years, but interest rates may now have peaked.
Top fixed-rate accounts offer just under 6%, but you have to lock your money in for a year. This is still below inflation at 6.7%, although a fix may be needed in case interest rates continue to fall.
“Those waiting to get their hands on a top savings deal may want to move on as the best deals may not be around for much longer,” Jobson commented.
It’s worth searching for the best savings account. If you plan to put your money in a fixed-rate account, make sure you won’t need to use your cash before the term ends.
If you’re hoping to beat inflation and have long-term financial goals then you should consider investing, especially now that savings rates may have peaked.
Although the value of your investment may rise and fall, you can ride out the volatility by investing over a few years.
A financial advisor can help you with your investment strategy or review your current portfolio.
Have interest rates peaked?
Many experts believe that interest rates are currently at their highest level, but this is not guaranteed.
If you feel uncertain about your money or are faced with an important decision, consider seeking advice from a financial adviser regulated by the Financial Conduct Authority (FCA) through Unbiased.