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8th August 2006
The Bank of England has recently announced their decision to increase the base rate by 0.25%, raising it to 4.75%.
Previous to the very steady year we been experiencing, the base rate was last changed in August 2005, when it dropped by 0.25%.
How will this increase effect loan customers?
The recent base rate increase will only affect variable rate loan customers and new customers.
People who already have a variable rate loan will see a slight increase in their interest rate, and their monthly repayment will reflect this. However, because the raise is only very slight, the change in monthly repayments will be fairly minimal.
New customers looking to take out a loan may see the quoted interest rate and monthly repayments increase slightly on both fixed and variable rate loans. Though again, this increase will only be very minimal.
Do I need to do anything?
This slight increase should not create a mass panic for anyone on a variable interest rate product. Although not impossible, it's quite unlikely for the base rate to increase by any considerable amount over the next year.
You don't have to do anything right now.
If you are looking to take out a new loan, many unsecured loan lenders offer fixed interest rates, removing the worry of fluctuating base rates. However, most secured loans only offer variable interest rates.
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