The Bank of England interest rate has increased for the first time in more than 10 years. The official base rate has risen from 0.25% to 0.5%, back to the level we last saw in August 2016.

The base rate is what most lenders and banks use to calculate their interest rates. So this rate rise means that borrowing will likely get more expensive.

But the Bank of England interest rate increasing isn’t bad news for everyone. We’ll take you through how the increase could affect you, and what you can do if you need help.

The Bank of England interest rate rises

As the economy has gradually been improving and inflation has increased over the last few months, an interest rate rise was only ever going to be a matter of time. And the decision about the Bank of England interest rate sits with a panel of nine people called the Monetary Policy Committee (MPC).

Seven out of the nine members of the MPC today (02/11/17) voted to increase the base rate to 0.5%. This was the most likely result of the meeting, as the MPC had already said any rate rises would be ‘gradual’.

Whether or not we’ll see the Bank of England interest rate increase again soon will depend on what happens to the economy after this rise.

How it affects homeowners

A rise in the Bank of England base rate affects homeowners most immediately. And in particular, it will affect you if your mortgage is on a standard variable rate (SVR) or tracker rate.

An SVR tracks the Bank of England interest rate – meaning when the base rate goes up, it increases too. So if you’re on a rate like this, it’s likely you’ll see your monthly payments go up.

Some 3.7 million households in the UK have this type of mortgage. If you’re one of them and you’re on a tight budget, you might start to struggle.

You won’t need to worry immediately if you’re on a fixed-rate mortgage deal. But when this ends, you could come onto your lender’s SVR, so you’ll need to fix again or switch to save.

How it affects renters

You might think that an interest rate increase wouldn’t affect you if you’re a tenant. And it wouldn’t directly, at least.

But your landlord is likely to own your property with a mortgage. If their bills go up, it’s possible they’ll pass this cost onto you. And this means your rent bill could increase.

How it affects savers

Savers are the main people that the Bank of England interest rate rise helps. This is because savings accounts are likely to start increasing the interest rates they offer – meaning your money would earn more when you saved.

So if you’re currently saving for a housing deposit or a car, a rise in the Bank of England base rate might be good news. It’s unlikely that savings rates will rise right away but keep your eyes open for any good deals.

Getting help

If you’re struggling with unmanageable debt and worrying about what the Bank of England interest rate rise means for you, don’t panic. There is a range of solutions out there that can help you get back in control of your finances. And getting some expert advice is the best way to make the right decision for you going forwards.

If you’re currently worried about your finances, have unsecured debts from personal borrowing and would like to speak confidentially and free of charge to an advisor who can talk to you about the benefits and considerations of a range of debt solutions and personal insolvency solutions, then please get in touch by calling 0800 048 1764.

You can also visit the Harrington Brooks website to request a call back at a time to suit you. By requesting a call, you are under no obligation to use our services. Harrington Brooks provide solutions to customers living in England, Scotland, Northern Ireland and Wales.

Should you choose to undertake a plan or arrangement, there may be consequences to consider, including restrictions on future expenditure, lending and on your ability to obtain further or future credit. If you do choose one of our solutions then fees, terms and conditions apply. For further information and advice please visit the Harrington Brooks website.

Harrington Brooks is a fee charging debt management provider. The services that we provide may be available at no cost from government and charity based providers. Further information can be obtained from the Money Advice Service here.