MILLIONS of households will breathe a sigh of relief as the Bank of England left interest rates unchanged again today.
Decision-makers on the Bank’s Monetary Policy Committee (MPC) have now kept interest rates at 5.25% for four consecutive meetings.
The Bank of England has held its base rate for a fourth consecutive time
It comes as cost of living pressures have eased sharply in recent months despite official figures showing a surprise increase in the rate of UK inflation from 3.9% in November to 4% in December.
Keeping interest rates at their current level brings some relief to businesses and household borrowers who have seen costs go up steadily from lows of 0.1% at the end of 2021 to the highest rate for nearly 16 years.
UK economic growth has also stagnated amid tighter lending conditions, and official figures released in February could reveal the country dipped into a technical recession at the end of last year, defined as two consecutive quarters of negative growth.
The BoE may respond by cutting rates, but it remains to be seen if this will occur anytime soon.
High street banks use the base rate to set the rates they offer to customers on things like loans, savings and mortgages.
Higher interest rates are bad news for households because it makes mortgage bills more expensive.
But freezing mortgage rates is good news for homeowners facing crippling repayments.
What it means for your money
Below we reveal more about what the rate hold means for your money.
Mortgages
Usually if rates rise it means that mortgage bills, depending on the type you have, will increase.
Those on a fixed-rate deal tend to be safe for now until they remortgage.
But other mortgages, such as a tracker or standard variable rate (SVR) mortgage, can be impacted straight away.
Homeowners on variable-rate mortgages might not see their repayments go up straight away, but they likely increase shortly after interest rates are hiked.
But the exact amount depends on your borrowing and your loan-to-value.
However, because the BoE has opted to freeze current rates, your lender may opt to do nothing at all.
Your bank should warn you of any increase to your rate before it goes up.
We’ve got more info on how to find the best mortgage rate deal here.
Credit card and loan rates
Again the cost of borrowing through loans, credit cards and overdrafts can go up if the base rate is hiked, as banks are likely to pass on the increased rate.
Certain loans you already have, like a personal loan or car financing, will usually stay the same anyway, as you’ve already agreed on the rate.
But rates for any future loan could be higher, and lenders could increase the rate on credit cards and overdrafts – although they must let you know beforehand.
But nothing is likely to change for now because of the rate hold.
However, you can still cancel a credit card if you want and will have 60 days to pay off any outstanding balance.
Savings rates
Savers are the main group to have benefited after the consecutive rate rises.
Banks tend to battle it out by offering market-leading interest rates.
Although banks are usually much slower to act than when passing on higher rates for borrowing.
Of course, because the rate will not change, banks will likely take advantage and keep their rates the same, too.
Anyone currently getting a low rate on easy-access savings could find it’s worth looking around for a better rate and moving their money.