On 22 June, The Bank of England raised interest rates to 5%. For approximately 1.4 million people, this will almost certainly result in a rise in their monthly mortgage repayments. Customers of credit cards, bank loans and car loans may also see a rise in the interest they are charged.
This rise in interest rate has been done in order to try and slow down the rise in inflation (the increase in the price of something over time). Why has inflation risen so much? The impact of Covid and the War in Ukraine have both caused prices to rise significantly as there have been less supplies available worldwide, but greater demand. In order to try and bring inflation down, interest rates are increased, because when people have less money to spend, they buy fewer things, reducing the demand for goods and therefore slowing price rises. People will also have less money to spend because the average wage isn’t increasing at the same rate as inflation.
It is anticipated that the Bank of England will increase interest rates further in the next few months.
If you are experiencing problems as a result of rising costs, you can contact one of our debt advisers today. Contact us by calling our Debt Telephone line on 0808 278 7839 or complete the online form to arrange an appointment.