Lenders Respond to Base Rate Rise

by Gill Montia

Story link: Lenders Respond to Base Rate Rise

Since last Thursday’s rise in the Bank of England’s base rate from 5.5% to 5.75%, mortgage and savings rates have begun to increase.

According to Moneyfacts, the financial information service, it could be months before the majority of banks, building societies and other financial institutions have made decisions about their interest rates.

However, all the larger lending organisations are expected to act in the next fortnight and may use the opportunity to review their savings products. A number of smaller lenders have already increased their standard variable mortgage rates by 0.25%.

Tracker mortgages will be the first to become more expensive, as they are directly linked to movements in the Bank of England’s rate.

The Portman building society, Egg, Royal Bank of Scotland and Tesco Mortgages have all announced increases to their standard variable mortgage rates, or have increased rates on particular mortgage products.

At the same time, savers are set to benefit, as some current account providers (including the Halifax, Lloyds TSB and Northern Rock) have raised interest rates by 0.25%, but this has been mainly on selected accounts.