Household Budgets Affected if Base Rate Rises
A third of Brits predict the base rate will rise this summer a new study shows, and one in ten expects this to have a substantial effect on their finances.
This month’s MPC announcement on whether the base rate will be held at 0.5 percent in May or rise after 25 months will occur on Thursday and the research by Lloyds TSB revealed while only five percent believe there will be a rise this month, 32 percent expect one this summer.
A further 19 percent expect interest rates to rise in October this year, while 62 percent believe they will rise before the start of 2012.
For 11 percent in the study, a rise in the base rate would force them to re-think their budgets and cut back on purchasing everyday items.
“It is clear that Brits are expecting interest rate rises this year and we know savers are uncertain whether to lock their savings away for a fixed period with the continued speculation that interest rates will change,” commented Greg Coughlan, Lloyds TSB savings head.
“Many are unsure how these rises will affect their financial situation.”
The study also revealed 18 percent of Brits think they will have to even cut back on the occasional treat to accommodate the impending base rate rise, while six percent are worrying how they will cope financially.
A further 31 percent acknowledge they will be able to manage an interest rate rise, while 28 percent do not expect any change in their financial situation.
Day to Day Budgeting
Research by Bright Grey revealed recently that money is the third least popular discussion topic in the home, after sex and death. General budgeting is also one of the most put-off chores, however, with a rise in interest rates looming, Brits will have no choice but to address their finances.
If you struggle to keep within budget each month, you may find aprepaid card could help as it does not allow you to spend more than the amount you loaded onto the card.