The Bank of England's latest interest rate hike has sent shockwaves through the UK housing market, leaving homeowners and savers grappling with financial strain. While those on fixed-rate mortgages remain shielded—for now—borrowers on variable or tracker deals are facing soaring monthly repayments.
The Mortgage Squeeze
Millions of homeowners are now feeling the pinch as the base rate climbs to its highest level in over a decade. Those on standard variable rate (SVR) mortgages could see their payments rise by hundreds of pounds a month, while tracker mortgage holders face immediate increases tied to the Bank’s decision.
Experts warn that the worst may still be ahead. "Many borrowers coming off fixed-rate deals later this year will face a payment shock," says financial analyst Sarah Thompson. "The days of ultra-low rates are over, and households need to prepare."
Savings Fall Short
While higher interest rates should theoretically benefit savers, banks have been slow to pass on the full increase. Many easy-access accounts still offer meagre returns, failing to keep pace with inflation.
Key concerns for savers:
- Most high-street banks offer rates below inflation
- Loyal customers often get worse deals than new savers
- Fixed-rate savings bonds now offer better returns—but lock money away
What Can You Do?
Mortgage holders approaching the end of fixed deals should shop around now, as lenders may offer better rates to secure business. Savers are advised to compare accounts regularly, as challenger banks often provide more competitive rates than traditional institutions.
The financial landscape remains volatile, and with further rate rises possible, both borrowers and savers need to stay informed to protect their finances.
