UK Interest Rates: 10 Things You Should Know

Are you concerned about the impact of rising interest rates in the United Kingdom? You're not by yourself. With the country experiencing the highest inflation rates in 40 years, many people are concerned about the future of interest rates and how they will affect their finances. Here are ten important facts about UK interest rates.

1)      The Bank of England sets interest rates in the UK. Established in 1694, it became independent from the Government in 1997 and makes decisions with regard to interest rates.

2)       The Bank of England Base Rate set by the Monetary Policy Committee (MPC) is the most important rate when it comes to borrowing in the UK.

3)      The inflation level in the UK is 9.4%. The Governments target for the Bank of England is 2%. Increasing the cost of borrowing therefore interest rates is a way to reduce inflation.

4)      When an inflation target is missed by more than 1% the Governor of the Bank of England must write to the Government and tell them why and what steps they are going to take to fix it. Here are some historic letters.

5)      When UK Bank of England Base Rate rates increase, fixed-rate mortgages tend to increase in price.

6)      When the UK Bank of England Base Rate decrease, fixed-rate mortgages tend to decrease in price

7)      The MPC announces policy 8 times a year. Nine members vote to either increase, decrease or keep the Bank of England base rate the same.

8)      The MPC usually make the announcement of their decision at 12 noon on a Thursday. The information is shared via the news networks.

9)      Recently, interest rate movements have been in 0.25% increments. However, that is not set in stone and changes may be greater than this (or lower).

10)   The dates for future announcements for 2022 and the provision ones for 2023 are as below: -

2022

Thursday 4th August

Thursday 15th September

Thursday 3rd November

Thursday 15th December

2023

Thursday 2nd February

Thursday 23rd March

Thursday 11th May

Thursday 22nd June

Thursday 3rd August

Thursday 21st September

Thursday 2nd November

Thursday 14th December

If you have a mortgage due for renewal in the next six months and you're concerned about interest rate rises, it may be wise to start exploring your options six months before the renewal date.

This article is for information purposes only and does not constitute advice. The author accepts no liability for any errors or inaccuracies. Seek professional advice to discuss your own situation.