With interest rates likely to start climbing towards 2.5%,we look at what you can achieve to acquire advantage or mitigate the effectsThe era of ultra-low interest rates will soon be coming to an end, with Bank of England governor sign Carney warning of the first rate rise at the turn of the year. But he also said that rates are unlikely to return to the 5%-plus that was common before the financial crisis. The unique normal may be closer to 2.25%- 2.5%, and he hinted. But what will rate hikes mean for your personal finances – and what can you achieve approximately it now?Mortgages A 0.5% rise in base rate will add £38 a month to the typical £150000 mortgage,assuming the homeowner is on a deal such as Nationwide’s 2.5% tracker loan, where borrowers pay base rate plus 2%. If base rate keeps on rising through 2016 and 2017 to hit 2.5%, and the pay rate on the Nationwide loans will be 4.5%. For someone with a £150000 mortgage it means the monthly repayment will jump from £673 today to £833. Our table shows what it will mean for other loan sizes.Savings rates are not going to rise across the board by any meansContinue reading...
Source: theguardian.com