There's been another rise to interest rates - the fourteenth time we've seen an increase in a row. The base rate now sits at five point two five percent. Experts says it looks like we will avoid recession, AND meet the government target to halve inflation this year - but is the rise in line with what experts were predicting?
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NewsTranscript
00:00 So the Bank of England increased the Bank of England base rate yesterday to 5.25.
00:06 So that was actually widely expected, which is actually good news for consumers.
00:11 It's not good news, obviously, interest rates are needing to rise and the reasons behind
00:14 it.
00:15 It's good news that it met market expectations because that meant some of the things we've
00:18 seen in the last week or so where some of the big banks are reducing rates, they'd already
00:22 priced that increase in, so they're not going to change the rate.
00:25 So it was nice to see some of the big banks taking the initiative over the last week to
00:30 reduce rates a little bit on mortgages.
00:32 The Bank of England continues its battle to control stubbornly high inflation, currently
00:37 standing at 7.9%, four times higher than their 2% target.
00:42 But just how will this latest hike to the base rate affect the average UK household?
00:46 What that means for us is we'll potentially have less money in our pocket if we have things
00:51 like mortgages, especially if you're taking a new mortgage out.
00:54 Obviously, the rates are higher than they used to be.
00:56 Or if you are just coming off a fixed rate, or indeed, if you're on a variable rate, it'll
01:00 increase straight away.
01:01 So less money in our pocket for mortgage holders.
01:05 Also indirectly, people who rent have seen their rental increases over the last couple
01:10 years anyway.
01:11 And that's a result of the interest rate rises as well, because don't forget, that will be
01:15 passed on to the landlords.
01:16 And guess where the landlords pass it on to?
01:18 They pass it on to those people renting.
01:19 So it affects how much money you've got at the end of the month.
01:23 Do you have any advice?
01:24 You know, is there anything that we should be doing or should be holding off from doing
01:27 at the moment that you would recommend?
01:30 First and foremost, make sure you can pay your mortgage.
01:33 Do, obviously, if you are starting to think that you may get in trouble, you may be looking
01:37 to miss a payment in the future.
01:39 The good news is that the government and the regulators are putting pressure on the banks
01:42 to help people.
01:44 And the banks are much more amenable.
01:46 So if you think you are going to be in trouble, pick up the phone, pick up the phone really
01:49 early is my key advice to you on this and get in touch.
01:52 Same goes with loans and credit cards as well.
01:55 So if you are going to think you're going to struggle, pick up the phone.
01:58 And you can also take some initiative as well in terms of if you have got a credit card,
02:02 there are still some real long zero balance credit cards offers out there.
02:06 So I would say if anyone's actually paying interest and you're able to switch, then do
02:10 so and obviously you can save yourself a lot of money.
02:13 Money specialists like Stephen are predicting a few more rate rises this year, with them
02:16 finally coming down again in around a year's time.
02:20 But what are experts hoping will be different in 12 months?
02:23 What's going to change?
02:24 Well, some of it's going to be luck and some of it's going to be what we've put in.
02:28 So in terms of luck, we are hoping for things like a milder winter, not just in the UK,
02:33 but across Europe, which hopefully keeps energy prices low.
02:36 So that's one thing.
02:38 Food prices, obviously energy prices do feed into food prices.
02:42 You can see it coming through there.
02:44 We're looking for the inflation in terms of people's pay to kind of start tapering off,
02:50 obviously, because it's almost a vicious cycle as inflation goes up, people need more in
02:54 pay, but then pay means that people spend more and prices go up.
02:57 So it's a vicious cycle.
02:58 We're trying to get that true balance between supply and demand.
03:01 But there's always time lags in everything.