Interest rates

Interest rates rise from 0.5% to 0.75%, the highest since March 2020

Updated March 23, 2022

2 min read

The good news is that Covid restrictions are lifting and consumer confidence is starting to return.

The bad news is that continuously rising interest rates, rising energy bills and rising inflation are destabilizing any return to confidence, putting many families at financial risk.

The recent rise in interest rates from 0.5% to 0.75%third hike in just four months, means interest rates are now at their highest level in March 2020.

There is a general feeling in the industry that inflation could exceed 8% this year, the highest level in decades.

interest rates go up

What do rising interest rates mean for you?

It remains likely that more interest rate hikes are on the horizon, which will make re-mortgaging from a fixed rate more expensive in the future.

Those who benefit from trailing rates or their lender’s standard variable rate – as well as those who have other loan or credit card debt that is not fixed will see their repayments increase according to the rate increase.

This means around two million households are prepared for higher mortgage payments, according to UK Finance. A typical follow-on mortgage is expected to increase by approximately £26 per month, and a typical standard variable rate mortgage of approximately £16.

Savers have been going through tough times for some time now and while rising interest rates should be welcome news, providers are not obligated to pass on base rate increases. This will be something to watch closely as suppliers may choose to start offering more attractive offers to win new customers.

The impact on financial markets of a rise in stock market interest rates is much less certain. In the recent past, stock prices have fallen when bond markets have fluctuated due to higher interest rate expectations.

Equity investors should expect some level of reaction as the stock market deals with the latest interest rate news. If the market becomes too volatile, it could deter more people from investing in higher interest savings accounts.

Karen Barrett, Unbiased Founder and CEO, comments:

“It’s time for savers to get informed. Seeking independent and reliable advice is the best way to ensure that you are making the right choice given your circumstances.”

About the Author

Kate Morgan

Kate has written for leading publications and blue chip companies for the past 20 years.