How is the 0.5 percent base rate affecting your finances?
The Bank of England has announced its decision to hold the base rate at 0.5 percent for the 28th month running - we ask how this is affecting you?
The Bank of England’s Monetary Policy Committee’s decision has seen the base rate stay at 0.5 percent for a record number of months, however views are mixed when it comes to whether they should start to raise this.
Those on variable rate mortgages for example are enjoying low monthly repayments. Although fixed rate products have started to come down recently after rocketing earlier in the year as predictions over a base rate rise come the summer were proved wrong, these low repayments may be helping those who are struggling with these costs to make a substantial dent in their mortgage payments.
Likewise, those with other debts are likely to struggle when the base rate eventually rises, with some already struggling to afford basic living costs due to inflation.
Some experts suggest a rise in the base rate will ease the effects of inflation, however, for those unable to save this may do little but make their monthly loan payments unaffordable.
Those looking to save seem to be the main consumer group losing out when it comes to the low base rate.
Many people looking to beat the rate of inflation with savings rates may fail in their search as few savings accounts offer these people a suitable rate due to the low base rate.
“After 28 months of the base rate staying at this historic low, consumers can be forgiven for assuming that this situation will not change anytime soon,” said Kevin Mountford, Moneysupermarket’s head of banking.
“However, we know that rates must rise eventually and this leaves many households, especially those sat on variable rate mortgages, with some tough decisions.”