Georgie Frost, head of consumer affairs at GoCompare, said; “Today’s rate rise is sure to impact households across the country, especially those ‘just about managing’. Today GoCompare is outlining the good, the bad and the next steps for consumers.
“The unpleasant truth is borrowing, which has been historically cheap in recent years, is about to become more expensive across the board. But, where many will feel this most is in their mortgage payments.
“While those on a fixed rate won’t see an immediate impact on their monthly bills, those on an variable rate or who have fixed deals set so expire over the next few months, should be budgeting for higher payments as they’ll likely see they mortgage costs rise.
“In addition to the impact on mortgage rates, today’s announcement will likely see loan and credit card interest rates creep up too. In recent years, the credit card market has been highly competitive with long 0% deals and relatively stable interest rates. After today, we could well see some of their deals shorten, or disappear form the market.
“As a worst case scenario, there’s a possibility that a rate rise may negatively impact house prices, which have experienced significant growth over the past few years.
“In this instance, higher mortgage costs and an increased cost of living could hurt first-time buyers, reducing their ability to get onto the property ladder. In turn, this could reduce the number of available buyers and housing demand, slowing growth.”
“Savers, who have experienced pitiful rates over the past few years, will be relieved to see some upwards movement on rates. That said, it’s unlikely the savings market will get hugely more attractive off the back of today’s announcement, with most of the action still to be found in interest paying current accounts.
“Another positive is that while things are undeniably about to get more expensive, the past decade has been far from normal. Interest rates have been at historic lows, so today’s announcement marks a step towards normality, however unpleasant for some.”
“Many people will understandably be worried about today’s news. The first step you should take is to evaluate the current state of your household finances. Look to see where you can make savings that might give you some breathing space against higher mortgage payments.
“At times like these, people often start to look at how they can make cutbacks on their household expenditure and luxuries. However, by taking some simple steps you could potentially save hundreds of pounds without any impact to your lifestyle.
“If you haven’t switched essentials like your energy tariff, insurance or mortgage for a while, get online and see whether you can get a better deal, as the chances are you probably can.
“Likewise, consider your credit card balances. If you’re paying interest on credit each month, look at the 0% deals currently on the market to see if there’s a more cost effective way to spread your payments.
“Once you’ve made the big changes, the next steps should be paying off existing debt where you can. Whether that’s clearing balances, or overpaying on your mortgage, anything you’re able to do now, may help strengthen your position over next few months, especially if there are future rises.”
Try GoCompare’s bill calculator to help work out your household budget and see how much you could save by switching.
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