What the interest rate rise means for savers and borrowers

05 November, 2017, 02:20 | Author: Franklin Nunez
  • POUND BOE

BoE Deputy Governor Ben Broadbent said on Friday that the Bank's signal that it may need to raise interest rates two more times was "not a promise", responding to a question about the BoE's previous attempts to signal the likely path for interest rates.

Monthly data on Britain's dominant services industry, expected at 0930 GMT on Friday, may provide more clues about the health of the economy and the outlook for further hikes.

In addition to the uncertainties that still remain over Brexit, the rate hike can be seen as part of a wider global monetary policy that will likely negatively affect the strong returns United Kingdom real estate has experienced in the last few years.

The panel which sets interest rates, called the Monetary Policy Committee (MPC), justified the rate increase by pointing to record-low unemployment, rising inflation and stronger global economic growth. That's more than markets are now expecting and more than the institute forecast in August.

A number of banks and building societies have already announced they will be increasing their rates in line with the rise announced by the Bank of England today.

"Market uncertainty has impacted both the residential and commercial development pipeline in London and the South East, which have been stuck in limbo since last year's European Union referendum, and if this measure can bring down inflation, particularly in construction costs, this is good news". 'Over the last year, two thirds of first time buyers have opted to fix their rate for up to two years, with a further one in four opting to fix for two to five years, ' she said.

Both Bush presidents bash 'blowhard' Donald Trump as unfit for the presidency
Trump - the father voted for Hillary Clinton and the son voted for "none of the above", as he told Mr. During the 2016 presidential campaign, neither former president endorsed Donald Trump .

Borrowers tend to spend more of any extra money they have than lenders, so the net effect of lower interest rates through this cash-flow channel is to encourage higher spending in aggregate.

"The reason why we've got additional rate increases in our forecast this time is because of the lower productivity profile", Amit Kara, head of United Kingdom macroeconomic forecasting at Niesr, told reporters.

People with variable rate mortgages will be hit by the hike, with around one in 10 households now using this mortgage type.

'Those on fixed rate deals are safe for the time being but when the term comes to an end new fixed deals could be more expensive.

But not everyone expects the rise to be the start of a stream of increases.

The former Tory MP and cabinet minister said the Bank of England was "itching" to raise interest rates but warned it was the wrong decision.

Why we didn't give automatic ticket to President Buhari - Yakubu Dogara
Permission to use portions of this article is granted provided appropriate credits are given to www.signalng.com and other relevant sources .

'What it does is reverse the post-referendum cut from 15 months ago, which, with activity broadly holding up, may have been an unnecessary safety net, ' he added.

The main losers will be households with a variable rate mortgage. He explained that an increase of 0.25% on a £150,000 standard variable mortgage at 4.5% over 25 years would see payments rise by more than £20 per month. Nonetheless borrowers can make big savings over SVR and also protect against any future rate rises.

"In addition, the MPC faces a long-term challenge of raising interest rates back to some sort of normal level after an exceptional and unprecedented decade of low rates since the financial crisis".

However, inflation has been running higher than that since February, and in September it hit 3% - the highest rate since April 2012.

'There is without doubt some symbolism around this first increase for 10 years but it is highly unlikely to cause the property market to implode. Arguably the real challenge comes not with the first rate rise we have now had but the one after that, ' he added.

Bigg Boss 11: Arshi Khan claims Priyank Sharma tried to kiss her
At the end of the task, Benafsha had the most points among the workers and she became the first captaincy contender. The fight between Bigg Boss 11 contestants Vikas Gupta and Shilpa Shinde is far from getting over anytime soon.

Recommended:



Popular

Saudi intercepts missile targeting Riyadh from Yemen
Rebels continue to hold much of Yemen and the United Nations has warned the country is on the brink of starvation . Saudi Arabia accuses its rival, Shiite power Iran, of training and helping arm the rebels.

Broadcom reportedly mulling $100B takeover of Qualcomm
Update: Bloomberg's sources say Broadcom could offer Qualcomm about $70 per share in cash and stock within the next few days. A subsequent report in the Wall Street Journal said the bid could come as early as this weekend.

Evra kicks one of his own fans in the head
Cantona received a whopping nine-month ban from the FA for his kung-fu kick incident more than 20 years ago at Old Trafford. Evra went to confront the fans and talk out their differences, but apparently, that didn't work out.

Bitcoin Price Breaks $7000, Posting a New Record High
According to Kay van Petersen, a Saxo Bank analyst, in the next decade, each unit of bitcoin will be worth $100,000. CME Group's introduction of bitcoin future contracts could bring more institutional investors into the arena.

Obama promotes health care law on first day of sign-ups
With insurers exiting the market, about half of counties will only have one participating carrier offering plans. Accordingly, most insurers set premiums for 2018 as if CSRs would not be available , hence the large increases.

Donna Brazile Says She Has "Proof" Clinton Rigged the Primary Against Sanders
Brazile's piece in Thursday's Politico , in which she described the state the party was in when she took over. She now calls this "a mistake I will forever regret".

Manchester City book spot in last-16 stage of Champions League
No matter - City levelled minutes later as Gundogan's sweet cross was headed home by Otamendi at the far post. Napoli , by contrast, were sharp and produced a number of good attacks in the opening quarter.

Aston Martin creates Ultimate Vanquish
You can find out more details about this new limited edition Aston Martin Vanquish over at their website at the link below. In the United Kingdom , prices for the coupe start at £211,995, and in Germany, the model costs €278,995.

College Football Playoff title game sites for 2021-24 revealed
Indianapolis is ready to rise to the occasion of making the 2022 College Football Playoff National Championship the best yet. And Houston is the nation's fourth-largest city and successfully hosted Super Bowl LI earlier this year at NRG Stadium.

House Intelligence Committee releases Russia-linked Facebook ads
Facebook has turned over more than 3,000 ads it found on the site that are linked to Russia's Internet Research Agency. The documents released by the House intelligence committee also underscore how targeted the ad campaigns were.