On 2 August 2018 the Monetary Policy Committee (MPC) of the Bank of England unanimously voted to increase interest rates by 0.25% for the second time in 9 months following their historic collapse to 0.25% in 2009.
Many younger people have no idea what it is to live in a country with a “realistic” interest rate and while many are confident that future rises will be small and that rates are unlikely to climb over 3% in the next 5 years at least – any rise still comes as a big shock to new borrowers.
0.75% as a base rate is still incredibly low, but anyone with a variable rate mortgage of £200,000 will probably have seen their monthly payments increase by over £20 a week as a result of the two recent rate rises.
Interest rates will continue to rise inexorably. What does this mean for mortgage holders? Is this a boom time for savers or will the promised interest rate culture continue for the foreseeable future meaning that savers need to consider other forms of investment to give themselves any sort of meaningful return.