Earlier this month the Bank of England announced a new interest-rate cut. Interest rates are now at a record low of 0.25%, which comes after the first cut since 2009 – so what does this mean for you?
For the past seven years the Bank of England base rate has been a steady 0.5%, and this has seen the average rate of interest you can earn on your savings fall. With this new, even lower interest rate of 0.25%, the chance of the lower rate sticking around for a while is high. There probably won’t be any immediate changes to your savings, but any interest that they may earn could take a hit in the future.
As I’m sure you already know, there are many different types of mortgages and this new interest rate will affect some more than others.
- If you have a tracker mortgage the rate of interest charged on your mortgage will drop by 0.25%
- If you have a standard variable rate mortgage – these don’t have to change, though the Bank of England is encouraging lenders to pass on the rate drop to customers so consider contacting your mortgage supplier to find out more
- If you have a fixed-rate mortgage – the rate of interest charged on your mortgage will stay the same for the duration of the fixed period, so you will not see any reduction in the interest you pay
You might find that going away becomes a little more expensive as interest rate cuts are often associated with falls in the exchange rate, meaning you get a weaker pound which makes travelling more expensive. It’s a good idea to plan ahead with your holiday and make sure that you are using the best exchange rate possible – get a Monese account today and you will only pay 0.5% on top of your transaction fee when you use your card abroad.
Photo credit: Images George Rex