Interest rates held at current level

The Bank of England has announced it’s keeping interest rates at 5.25%. This comes after inflation – the rate at which prices increase – fell to 6.7% in the year to August.

The 0.1% drop on July’s figure came as a surprise given surging oil prices. But 6.7% is still way above the government’s long-term target to keep inflation below 2%.

Before the inflation figure was announced, experts were widely predicting a 0.25% increase in interest rates. This would have been the 15th consecutive hike in rates.

The Bank of England’s announcement suggests it is encouraged by falling inflation and feels another interest rate increase is unnecessary.

Increasing interest rates is commonly used to ease inflation. By making borrowing more expensive, it is hoped people will spend less resulting in a slowdown in price increases as retailers try to tempt shoppers to part with their cash.

Still struggling?

Despite the Bank of England’s decision to hold interest rates, many people have already seen the amount they’re spending on housing go up as mortgages become more expensive and landlords pass on rising costs to tenants.

Worried about paying your mortgage?

If you’re worried about making your mortgage payments, speak to your lender to see how they can help.

Sebrina McCullough, our head of external relations, said:

“Our advice to anyone struggling is to get help as soon as possible – you’re not alone. Make use of the Mortgage Charter formed by mortgage lenders, the FCA and the government, allowing homeowners to switch to interest-only payments or extend their mortgage term to reduce their monthly payments for six months – neither will affect your credit score and can be done without affordability checks.”

She also encouraged people to check they're getting all the financial support they're entitled to:

"With over £15 billion in benefits going unclaimed each year, it’s worth checking what extra support is available as it could prove to be a lifeline. We completed a benefits assessment with more than one in three (38%) of the customers we spoke to in August. On average, those customers found they could be claiming an extra £1,067.” 

You can find more information on what to do if you’re struggling in our guide on what you should do if you fall behind with your mortgage payments.

Rent becoming unaffordable?

If you’re renting and your landlord is trying to pass on rising costs to you, it’s important to know your rights to avoid being exploited. In most circumstances, your landlord can only increase your rent once a year by a reasonable amount. Find more information on your rights and what to do if you're struggling to pay. 

There are also ideas on how to make savings in other areas and information on the support that’s available if money worries are affecting your mental health in our blog on how to manage rising rents and mortgage interest rates.

Debt advice

If you can no longer manage all of your financial commitments, we're here to help. You can access our free debt advice online 24/7 or by phone on 0161 518 8282 Monday to Friday 8am-8pm and over the weekend between 10am-4pm.