THE Bank of England has raised interest rates to 0.5% – its second increase to the base rate in two months. The decision comes just an hour after the new energy price cap was announced, and w…
This is harder to quantify, but a side-effect of the rising Bank of England rates is that the government will pay more for its borrowing.National Insurance is already going up by 1.25 percentage points in April, adding hundreds to workers' tax bills.
There is no suggestion that it will do any of these at the moment, but it may need to in the future if its borrowing costs continue to go up.If you’re a saver you could see an increase in the interest you are getting on variable rate saving accounts and cash Isas.It's also worth pointing out that a marginal rate hike doesn't do an awful lot to boost your savings - if you had £1,000 earning interest of 0.25% that's just £2.50 a year.
Further hikes could see rates on new fixes improve, but savers risk being locked into less competitive rates if they get a fixed rate now. "If Base Rate rises to 1.25% and all that gets passed on to savings rates you’d make an extra £204 in interest at the end of the two years.”Annuities rates are link to the cost of government borrowing and pay a guaranteed income for life.
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