As Rishi Sunak and Jeremy Hunt rule out direct financial help for borrowers, here’s what the interest rate leap means for you.
What is happening to interest rates?
The Bank of England put its base rate up by 0.5 per cent at the latest meeting of the Monetary Policy Committee (MPC) to leave rates at 5 per cent, their highest level since April 2008. Banks use base rates both to set the prices they charge to borrowers and pay to depositors. So when base rates go up, their standard mortgage rates go up. Savers’ rates are also supposed to go up, but banks tend to be a lot slower to increase these. Does that mean banks are profiteering off the back of your mortgage misery? There is good evidence that they are. Their net interest margins – a measure of lenders’ profitability – have been rising of late.
