Although savers will be cheered by the news that an interest rate rise is likely to come sooner than forecast by many economic experts, anyone with a mortgage, loan or outstanding amount on a credit card, will be wondering what effect this is going to have on their monthly payments.
Bank of England Governor Mark Carney says he expects interest rates to increase up to around 2.5% by 2016, when they will level off. That rate could climb to 3% by 2017, a considerable jump from the present rate of 0.5%, which is a record low that has stayed the same since October, 2008.
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Householders know that when the Bank of England puts up rates, the banks and other lenders soon follow, and while this benefits long-suffering savers, anyone with a loan is likely to face a hike in their mortgage and other repayments, depending on terms and conditions.
Faced with rising rates, the benefit of having a high credit rating is that it can help to negotiate a better deal on a mortgage or loan. People who are still on a fixed rate mortgage will only be hit by any rise in rates when the fixed term expires. After that, the interest rate on their mortgage could go up significantly.
Getting a credit check now could provide you with the information you need to get your finances in order before any rise in rates does kick in. Your credit rating determines your ability to get a loan, re-arrange your mortgage or change lenders. The bank or building society will always run a credit check before they agree to lend you money and your credit score can also affect the interest rate you are offered.
Some pundits are forecasting that the rises, when they do come, will be in increments of 0.25%, climbing to 3% by 2017. Although some may consider this fairly modest compared to rates in the '80s and '90s, the Office for Budget Responsibility (OBR) says the implications of a rise of 2.5% in the base rate would be an extra £230 a month for someone with a £150,000 mortgage at present.
Anyone wanting to get an up-to-date credit check, can go here to find out where they stand.