Interest Rates ‘Will Go Up’ – What To Do With Your Savings, Investments, and Mortgage | Personal Finances | Finance
Interest rates have been historically low recently, impacting Britons in various ways. Although speculation has increased, the central bank could raise its key rate in early November, it once again held the rate at 0.1% – where it has been since March 2020. Despite no change, there will be no change. doubtless impact a number of aspects of British life, including savings, investments and mortgages.
Ms Barrett said interest rate hikes are likely to come in the near future and it is important to be prepared.
First, it focused on mortgages, following a number of providers speculatively raising their rates even before the central bank’s decision was announced.
Ms Barrett said: “We are finding that mortgage lenders are already assessing expected increases in their new transactions, so re-mortgaging from a fixed rate will be more expensive in the future.”
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âThose on their lender’s tracking rate or standard variable rate – as well as those with other loan or credit card debt that is not fixed have had a stay of execution for this month but will see their repayments increase as soon as the bank decides to increase the rates.
However, another key area likely to be affected is savings, and savers generally look to the Bank of England for any optimism about their situation.
Ms Barrett continued: âSavers have been going through tough times for some time now and the recent decision has done nothing to improve their situation.
âInterest rates on savings accounts are controlled by the account providers and therefore should not increase just because the bank rate does.
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“But a higher discount rate would make it easier for providers to raise interest rates for their savings customers and to provide attractive offers to win new customers.”
Many individuals have also decided to dip their toes in the water of investing recently, especially with returns on savings falling so far behind.
However, there are also implications to consider in this sphere as well, which are brought about by changes in interest rates.
Ms Barrett added: âThe impact on financial markets of rising stock market interest rates is much less certain.
âIn the recent past, stock prices have fallen as bond markets fluctuated due to higher interest rate expectations.
âThe stock market has performed well lately and has remained indifferent despite the prospect of rising interest rates.
âBut equity investors should expect some level of reaction as the stock market processes the latest news on interest rates.
âIf the market becomes too volatile, it could turn more people away from investments and into higher interest savings accounts.
“With an inflation forecast of 5% next year, rates should surely be on the rise.”
Ms Barrett concluded by urging the British to seek independent and reliable advice on their situation.
Whether it’s mortgages, savings, or investing, experts can often offer their knowledge of the markets to help individuals.
Asking for advice, she said, also ensures that Britons are making the right choice for their personal circumstances.