Money Wellness
Bank of England's London headquarters
category iconcost of living
category iconHousing
calendar icon03 Aug 2023

Interest rates rise for the 14th time in a row

The Bank of England has raised interest rates from 5% to 5.25% in a bid to tackle stubbornly high prices.

Despite falling by more than expected in June to 7.9%, UK inflation – the rate at which prices rise – is still nearly four times the Bank of England’s target of 2%.

Raising the interest rate will make borrowing more expensive. The Bank hopes this will make people spend less, easing inflation.

Today’s decision will mean higher costs on mortgages and loans for some people. Private tenants may also be affected, as some landlords look to pass on rising costs by putting up rents.

The effect on your mortgage

The rise in interest rates will mean people on an average tracker mortgage will pay about £24 a month more. Those on typical standard variable rate mortgages will be looking at an increase of around £15 a month.

Most people have fixed-rate deals and will be protected from price rises in the short-term. But around 800,000 deals are due to end before the end of the year and another 1.6 million will be up in 2024.

If you’re struggling to make your mortgage payments

Lenders are expected to support customers in financial difficulty. They need to consider a range of options if you're struggling, including offering a period of reduced monthly payments or extending the term of your mortgage. 

So, the first step if you’re worried about making your mortgage payments is to speak to your lender to see how they can help. You can find more information in our guide on what you should do if you fall behind with your mortgage payments. 

If you’re struggling to pay your rent 

If your landlord wants to put your rent up in response to rising interest rates, it’s good to know your rights. In most circumstances, your landlord can only raise your rent once a year and the increase has to be reasonable. Find more information on your rights and what to do if you’re struggling to pay. 

Other support

For budgeting ideas and information on getting support if money worries are affecting your mental health, check out our blog on how to manage rising rents and mortgage interest rates. 

And if you need debt advice, we're always here to help. You can access our advice online or over the phone.

 

 

Avatar of Rebecca Routledge

Rebecca Routledge

A qualified journalist for over 15 years with a background in financial services. Rebecca is Money Wellness’s consumer champion, helping you improve your financial wellbeing by providing information on everything from income maximisation to budgeting and saving tips.

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