Following the financial crash of 2008, the Bank of England (BoE) reduced the base rate – on which all other interest rates are pegged – to a record low of 0.5% in a bid to stimulate growth by making borrowing cheaper. Four years on, the rate remains the same.
New BoE chief Mark Carney has indicated he won’t raise the base rate until unemployment goes below 7%, currently at 7.8%. But with the UK economy finally showing the first signs of a sustained recovery – the ‘green shoots’ optimistically talked up too soon – it’s only a matter of time before the Bank does raise the rate, and interest rates along with it.
The question is: what does this mean for you? Continue reading