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Bank of England raise interest rates from 0.1% to 0.25%

  • Writer: Mortgage Tree
    Mortgage Tree
  • Dec 28, 2021
  • 2 min read



Article by Justin Basini

CEO & Co-Founder, ClearScore


The Bank of England raised interest rates from 0.1% to 0.25%. In a move that was widely expected to be delayed until next year, the UK was the first major economy to increase its rates.

When big things happen that affect our financial lives, I like to share some thoughts on what you can do to respond and prepare your finances. This isn’t advice, but information for you to think about:

  • Interest rates are almost certain to rise throughout 2022. At over 5%, inflation (how much things go up in price) is high. The Bank of England uses interest rates to control inflation. Yesterday, they showed that controlling inflation and keeping the cost of living stable is more important than protecting the economy from potential shocks such as the rise of the Omicron variant.

  • Banks are now very likely to try and take advantage of rising interest rates by passing on this increase to people borrowing money, rather than to those saving money. This means that the cost of borrowing could go up. I have my mortgage with Barclays and yesterday at 4.54pm, I received a text saying the interest rate on my mortgage was going up – pretty quick work! Needless to say, I didn’t receive a similar text message from the bank with whom I have my savings.

  • Borrow better – look at your credit accounts now. If you’re paying interest on your credit card, consider shifting your balance to a balance transfer card. Some offers on ClearScore at the minute give you almost three years of 0% interest for a 1.5-3% balance transfer fee. If you’re planning on buying something big, getting a new card with a 0% purchase rate could be a smart move before interest rates rise more. Take a look at your offers.

  • Don’t pay the standard variable rate on your mortgage. Mortgage rates are going up, but there are still some great deals out there. If you’re on a standard variable rate (SVR), then you should see whether you could save by remortgaging. I’ve just remortgaged, and knowing my interest rate is locked in for the next few years has given me great peace of mind.

  • Make sure you can afford what you borrow. While your credit score shows how likely you are to repay by looking at your credit history, your new affordability score indicates whether you'll be able to repay based on your income and spending. This helps you know where you stand when it comes to borrowing. And just like your credit score and report, it’s free, forever. Activate your affordability score.

  • Use the power of your bank account. When you share your data with the lenders on our panel, they get a clearer picture of your income and spending. This gives them more confidence in your financial position, and will result in them giving you better offers that save you money. Link your bank accounts.

  • Stay calm and stay safe. There’s no doubt we’re living through strange times. But doing a bit of research and looking at your money habits can help you take control of your finances and get ahead in the new year.

  • Call Mortgage Tree to review your mortgage and explore what new mortgage offers are out there.


 
 
 

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Mortgage Tree offers a nationwide mortgage broking service from our base near York, North Yorkshire. We specialise in mortgages and insurance. Whether you are a first time buyer or you are a buy to let investor with multiple properties, Mortgage Tree will ensure that you get the most suitable products available.

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Jason Gentles t/a Mortgage Tree  (FCA No. 502275) is an appointed representative of Julian Harris Mortgages Ltd (FCA No. 304155), which is authorised and regulated by the Financial Conduct Authority.

The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website at www.financial-ombudsman.org.uk

Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Please note that some mortgages such as commercial BTLs are not regulated by the FCA.

The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK.

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