UK Interest rates and Cost of Living
posted 19th September 2022
UK Interest rates
Currently sits 1.75% with further increases anticipated later in the year.
The Bank of England raises interest rates in an attempt to slow down inflation.
Prises are rising (inflation) quickly due to many factors e.g. higher grain, oil and gas prices partly due to post pandemic economic resurgence and war in Ukraine.
How to tackle inflation
The Bank of England's traditional response to rising inflation is to raise interest rates.
This increases cost of borrowing and encourage less spending/more saving.
However, it is a tricky balancing act to avoid slowing down the economy.
This can encourage people to save, but means some mortgage customers pay more.
How does interest rates affect me?
Mortgage - tracker and variable mortgage customers will see monthly repayments rise.
Credit cards & loans - lenders could decide to increase their fees as interest rates rises.
Savings - banks may pass on part interest rates rises to savers giving a higher return.
However, for savers, interest rates are not keeping up with price increases.
Govt help with Cost of Living
£650 for Low Income households who receive benefits in 2 instalments (£326 & £324).
£300 for Pensioner households.
£150 for Disability benefit individuals.
Energy bills to typical households limited to £2,500 for 2 years from 1 Oct 2022.
£400 discounts and how it will be paid
Households energy bill will be cut by £400, applied from Oct '22 to Mar '23.
Oct '22 £66, Nov '22 £66, Dec '22 £67, Jan '23 £67, Feb '23 £67, Mar '23 £67.
Discounts will be made automatically by energy suppliers (no need to apply).
Direct Debit/Smart Payment meter: Automatic. Traditional meter: Voucher.
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