The central bank lifted the base rate from 3.75% to 4% to discourage spending and cool price increases across the economy. Roughly one million homeowners on tracker and standard variable rate mortgages face immediate payment increases, while fixed-rate borrowers will see higher costs when remortgaging. Businesses confronting elevated loan expenses may restrict hiring, limit wage growth, or turn to automation to manage their overheads. Meanwhile, renters could be burdened with steeper housing costs if landlords pass down their own rising financing charges.
Key points
Homeowners on variable deals face immediate repayment hikes, while the 87% on fixed terms…: Homeowners on variable deals face immediate repayment hikes, while the 87% on fixed terms will encounter steeper rates upon remortgaging.
Savers can secure improved financial returns by actively shopping around and transferring…: Savers can secure improved financial returns by actively shopping around and transferring funds out of older accounts.
Increased business borrowing costs threaten to curb employment opportunities, constrain p…: Increased business borrowing costs threaten to curb employment opportunities, constrain pay rises, and prompt firms to adopt automation.
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Policymakers at the Bank of England have raised interest rates for the first time in more than three years - and it could be good and bad news for you.
Here's how millions of people could be affected by the decision, which raised the benchmark borrowing rate from 3.75% to 4%.
1. Job and pay prospects could be hit
Rate-setters at the Bank make changes to interest rates to fulfil their role of keeping price rises at a steady level.
Higher rates are meant to encourage people to spend less, reducing demand for goods and services and limiting price rises.
This impacts businesses in two ways - less money to spend among their customers may mean they sell less, but also the cost of borrowing to invest as a company goes up.
Many businesses, particularly small ones, have variable rate loans which are influenced by the Bank rate.
Firms say higher rates limit their ability to offer new jobs and wage rises.
Mitchell Barnes, founder and chief executive of Ryse 3D, which manufactures 3D parts for the defence…
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