Interest rate rise to cause 'some pain', says bank deputy

Jon Howard
November 5, 2017

Mr Carney also said he "expected" banks to change savers' rates accordingly.

Danske Bank economist Conor Lambe said: "On its own, the increase is likely to have only a modest impact".

"When the Bank of England previously cut interest rate in 2016, we asked the Government to increase efforts to tackle late payment more aggressively".

"Do not be surprised if some lenders use this move as an opportunity to sneak rates up further maybe 0.3%", he said.

At the Black Country's biggest building society, the West Brom, a spokesman said: "The West Brom is now reviewing all its product rates for savers and mortgage borrowers following the decision by the Bank of England today November 2) to increase Bank Base Rate to 0.50 per cent".

"With savings rates with the High Street providers paying as little as 0.01%, it's time for savers to vote with their feet and earn as much interest as they can elsewhere", says Anna Bowes of Savings Champion.

The average house price across the Black Country boroughs of Dudley, Walsall, Sandwell and the city of Wolverhampton varies between around £140,000 and £170,000, rising over £200,000 in Staffordshire.

Households on variable or tracker mortgages will see their monthly costs increase by about £15, according to Nationwide.

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"For a whole generation of United Kingdom households now entering adulthood, it's a small but important reminder that interest rates can move in an upward direction, even if only slowly", Aberdeen Standard Investments economist Lucy O'Carroll commented. "Even a small increase could potentially be quite significant".

Not all home owners have variable mortgages, and interest payments on debt are "lower than they've ever been relative to income", he said.

"Standard and Poors', the ratings agency, has said consumer debt is unsustainable", said Dr Farquhar.

Former pensions minister Sir Steve Webb, who is now director of policy at Royal London, said: "After a decade of low and falling interest rates, today's rise provides a modest boost for pensions".

However, they appear more willing to pass the rate rise on to borrowers.

He predicts a series of small, 0.25 per cent, increases over time, particularly while the Bank of England and the rest of the financial economy waits for some kind of certainty over the impact of Brexit. "And that is not what the governor said yesterday either".

What's going on? Are banks and building societies ripping us all off?

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