Interest rates in the UK are currently at 5.25%, the highest level since 2008. This is due to the Bank of England's efforts to combat inflation, which is currently at a 40-year high.
The Bank of England has raised interest rates eight times in a row since December 2021. It is expected that the Bank will continue to raise interest rates in the coming months, in an effort to bring inflation under control.
What does this mean for borrowers and savers?
For borrowers, the rise in interest rates means that they will have to pay higher monthly repayments on their loans. This could put a strain on household finances, especially for borrowers who are already struggling to make ends meet.
For savers, the rise in interest rates is good news. It means that they will earn a higher return on their savings. However, it is important to note that the interest rates offered by banks and building societies are still relatively low, compared to historical levels.
What to expect in the future?
It is difficult to predict what will happen to interest rates in the UK in the long term. However, it is likely that they will remain high for the foreseeable future, until inflation is brought under control.
Tips for borrowers and savers
If you are a borrower, it is important to be prepared for the possibility of further interest rate rises. You should review your budget and make sure that you can afford to make higher monthly repayments on your loans.
If you are a saver, you should consider switching to a savings account that offers a higher interest rate. You may also want to consider investing your savings in other assets, such as stocks or bonds.
It is important to seek professional advice if you are unsure about what to do with your finances.