Historical interest rates in the UK, 1979-2017: rise and fall
Thursday, December 20, 2018

Historical interest rates in the UK, 1979-2017: rise and fall

  • Landlord Forum
  • Discount Codes / Shop

  • Contact
  • About

Landlord Logo


Landlord Blog / Life

Aimlessly blogging about landlord life since 1832. No nonsense!

MENU


  • All Articles
  • New Landlords
  • Landlord Resources
  • Landlord Guides
  • Landlord Forms
  • Landlord Legal

      • Legal Obligations
      • Landlord Legal Responsibilities & Regulations
      • Regulation Checklist For New Tenancies
      • HMO Legal Responsibilities & Regulations
      • Legal Advice / Services
      • Free Tenant Eviction Legal Advice
      • Tenancy Agreement
      • Tenancy Agreement Guide
      • Tenancy Deposit
      • Tenant Security Deposit Guide
      • I haven’t secured my tenant’s deposit
      • Tax
      • Landlord Tax Guide

      • Landlord legal responsibilities & regulations
        Landlord Law
        A list of legal requirements and regulations for landlords in England & Wales, including Deposits & Health & Safety.

      • Don’t worry, there’s more…
      • ALL Landlord Legal articles →   
        ALL Tenancy Deposit articles →
    • X
  • Problem Tenants

      • Tenant Eviction
      • Free Tenant Eviction Legal Advice
      • How Landlords Can Evict Bad Tenants
      • List of Professional Tenant Eviction services
      • Tenancy
      • My tenant wants to leave early
      • My tenant is sub-letting without permission
      • My tenant smokes without permission
      • Messy Tenants & End Of Tenancy Cleaning
      • Tenants with unauthorised Pets/Dogs
      • How to End/Terminate a Tenancy
      • Rent / Money
      • My tenant’s rent is late
      • My tenant has stopped paying rent
      • My tenant left without paying bills
      • Repairs & Maintenance
      • My tenant has caused damage
      • My Tenant isn’t happy with repairs
      • Who is responsible for Mould?
      • Access to Property
      • My tenant won’t let me into the property
      • My tenant has changed the door locks

      • Problem tenants? Get free legal advice!
        LegalForLandlord Logo
        Get free landlord legal advice to help deal with problem tenants from LegalforLandlord. No obligations!

      • Don’t worry, there’s more…
      • ALL articles on Tenant Evictions →   
        ALL articles on Problem Tenants →   
        ALL articles on Tenancy Agreements →
    • X
  • Finding Tenants

      • Advertising / Marketing
      • The Best Online letting agents
      • How to find tenants for free
      • How to find tenants quickly
      • How to find HMO tenants
      • Professional Property Photography
      • Commercial
      • Find tenants for Commercial Premises
      • Referencing
      • How to reference tenants
      • Early signs of bad tenants
      • How to avoid bad tenants
      • What makes a good tenant?
      • Trouble Shooting
      • How to find tenants without an agent
      • How much rent should I charge?
      • Why isn’t my property renting?
      • Should I accept pets?
      • Should I take my own viewings?

      • Find Tenants for less on Rightmove!
        Rightmove Logo
        A list of the best UK Online Agents that will market your rental on Rightmove & Zoopla. Avoid expensive high-street agent fees!

      • Don’t worry, there’s more…
      • ALL articles on Finding Tenants & Marketing →
    • X
  • Landlord Insurance
  • BTL Mortgages
  • Landlord Forum

You are here: Landlord Blog » UK Housing Statistics  Trends » UK Interest Rate History / Graph  Facts

UK Interest Rate History / Graph  Facts

Quick UK Interest Rate Stats
Current UK Interest Rate0.75%
Last movementAugust 2018
Highest on record15.00% in Oct 1989

Show all dates


15.00% in Nov 1989

15.00% in Dec 1989

15.00% in Jan 1990

15.00% in Feb 1990

15.00% in Mar 1990

15.00% in Apr 1990

15.00% in May 1990

15.00% in Jun 1990

15.00% in Jul 1990

15.00% in Aug 1990

15.00% in Sep 1990
Lowest on record0.25% in Aug 2016

Show all dates


0.25% in Sep 2016

0.25% in Oct 2016

0.25% in Nov 2016

0.25% in Dec 2016

0.25% in Jan 2017

0.25% in Feb 2017

0.25% in Mar 2017

0.25% in Apr 2017

0.25% in May 2017

0.25% in Jun 2017

0.25% in Jul 2017

0.25% in Aug 2017

0.25% in Sep 2017

0.25% in Oct 2017

The UK base rate is the interest rate at which commercial banks, like Barcleys and Natwest, borrow from the Bank of England.

In theory, lower the interest rate, the cheaper loans become for borrowers, because generally, lenders will base their rates according to the base rate. Similarly, the base rate will generally determine the interest rate at which banks will set their savings account products.

Essentially, low interest rates are generally good for borrowers, but bad for savers.

Below is a graph showing the change in the Bank of England base rate since January 1985.

MonthBase RateChange
Sep 20180.75%
0.00
Aug 20180.75%
0.25
Jul 20180.50%
0.00
Jun 20180.50%
0.00
May 20180.50%
0.00
Apr 20180.50%
0.00
Mar 20180.50%
0.00
Feb 20180.50%
0.00
Jan 20180.50%
0.00
Dec 20170.50%
0.00
Nov 20170.50%
0.25
Oct 20170.25%
0.00
Sep 20170.25%
0.00
Aug 20170.25%
0.00
Jul 20170.25%
0.00
Jun 20170.25%
0.00
May 20170.25%
0.00
Apr 20170.25%
0.00
Mar 20170.25%
0.00
Feb 20170.25%
0.00
Jan 20170.25%
0.00
Dec 20160.25%
0.00
Nov 20160.25%
0.00
Oct 20160.25%
0.00
Sep 20160.25%
0.00
Aug 20160.25%
0.25
Jul 20160.50%
0.00
Jun 20160.50%
0.00
May 20160.50%
0.00
Apr 20160.50%
0.00
Mar 20160.50%
0.00
Feb 20160.50%
0.00
Jan 20160.50%
0.00
Dec 20150.50%
0.00
Nov 20150.50%
0.00
Oct 20150.50%
0.00
Sep 20150.50%
0.00
Aug 20150.50%
0.00
Jul 20150.50%
0.00
Jun 20150.50%
0.00
May 20150.50%
0.00
Apr 20150.50%
0.00
Mar 20150.50%
0.00
Feb 20150.50%
0.00
Jan 20150.50%
0.00
Dec 20140.50%
0.00
Nov 20140.50%
0.00
Oct 20140.50%
0.00
Sep 20140.50%
0.00
Aug 20140.50%
0.00
Jul 20140.50%
0.00
Jun 20140.50%
0.00
May 20140.50%
0.00
Apr 20140.50%
0.00
Mar 20140.50%
0.00
Feb 20140.50%
0.00
Jan 20140.50%
0.00
Dec 20130.50%
0.00
Nov 20130.50%
0.00
Oct 20130.50%
0.00
Sep 20130.50%
0.00
Aug 20130.50%
0.00
Jul 20130.50%
0.00
Jun 20130.50%
0.00
May 20130.50%
0.00
Apr 20130.50%
0.00
Mar 20130.50%
0.00
Feb 20130.50%
0.00
Jan 20130.50%
0.00
Dec 20120.50%
0.00
Nov 20120.50%
0.00
Oct 20120.50%
0.00
Sep 20120.50%
0.00
Aug 20120.50%
0.00
Jul 20120.50%
0.00
Jun 20120.50%
0.00
May 20120.50%
0.00
Apr 20120.50%
0.00
Mar 20120.50%
0.00
Feb 20120.50%
0.00
Jan 20120.50%
0.00
Dec 20110.50%
0.00
Nov 20110.50%
0.00
Oct 20110.50%
0.00
Sep 20110.50%
0.00
Aug 20110.50%
0.00
Jul 20110.50%
0.00
Jun 20110.50%
0.00
May 20110.50%
0.00
Apr 20110.50%
0.00
Mar 20110.50%
0.00
Feb 20110.50%
0.00
Jan 20110.50%
0.00
Dec 20100.50%
0.00
Nov 20100.50%
0.00
Sep 20100.50%
0.00
Aug 20100.50%
0.00
Jul 20100.50%
0.00
Jun 20100.50%
0.00
May 20100.50%
0.00
Apr 20100.50%
0.00
Mar 20100.50%
0.00
Feb 20100.50%
0.00
Jan 20100.50%
0.00
Dec 20090.50%
0.00
Nov 20090.50%
0.00
Oct 20090.50%
0.00
Sep 20090.50%
0.00
Aug 20090.50%
0.00
Jul 20090.50%
0.00
Jun 20090.50%
0.00
May 20090.50%
0.00
Apr 20090.50%
0.50
Feb 20091.00%
0.50
Jan 20091.50%
0.50
Dec 20082.00%
1.00
Nov 20083.00%
1.50
Oct 20084.50%
0.50
Sep 20085.00%
0.00
Aug 20085.00%
0.00
Jul 20085.00%
0.00
Jun 20085.00%
0.00
May 20085.00%
0.00
Apr 20085.00%
0.25
Mar 20085.25%
0.00
Feb 20085.25%
0.25
Jan 20085.50%
0.00
Dec 20075.50%
0.25
Nov 20075.75%
0.00
Oct 20075.75%
0.00
Sep 20075.75%
0.00
Jul 20075.75%
0.25
Jun 20075.50%
0.00
May 20075.50%
0.25
Apr 20075.25%
0.00
Mar 20075.25%
0.00
Feb 20075.25%
0.00
Jan 20075.25%
0.25
Dec 20065.00%
0.00
Nov 20065.00%
0.25
Oct 20064.75%
0.00
Sep 20064.75%
0.00
Aug 20064.75%
0.25
Jul 20064.50%
0.00
Jun 20064.50%
0.00
May 20064.50%
0.00
Apr 20064.50%
0.00
Mar 20064.50%
0.00
Feb 20064.50%
0.00
Jan 20064.50%
0.00
Dec 20054.50%
0.00
Nov 20054.50%
0.00
Oct 20054.50%
0.00
Sep 20054.50%
0.00
Aug 20054.50%
0.25
Jul 20054.75%
0.00
Jun 20054.75%
0.00
May 20054.75%
0.00
Apr 20054.75%
0.00
Mar 20054.75%
0.00
Feb 20054.75%
0.00
Jan 20054.75%
0.00
Dec 20044.75%
0.00
Nov 20044.75%
0.00
Oct 20044.75%
0.00
Sep 20044.75%
0.00
Aug 20044.75%
0.25
Jul 20044.50%
0.00
Jun 20044.50%
0.25
May 20044.25%
0.25
Apr 20044.00%
0.00
Mar 20044.00%
0.00
Feb 20044.00%
0.25
Jan 20043.75%
0.00
Dec 20033.75%
0.00
Nov 20033.75%
0.25
Oct 20033.50%
0.00
Sep 20033.50%
0.00
Aug 20033.50%
0.00
Jul 20033.50%
0.25
Jun 20033.75%
0.00
May 20033.75%
0.00
Apr 20033.75%
0.00
Mar 20033.75%
0.00
Feb 20033.75%
0.25
Jan 20034.00%
0.00
Dec 20024.00%
0.00
Nov 20024.00%
0.00
Oct 20024.00%
0.00
Sep 20024.00%
0.00
Aug 20024.00%
0.00
Jul 20024.00%
0.00
Jun 20024.00%
0.00
May 20024.00%
0.00
Apr 20024.00%
0.00
Mar 20024.00%
0.00
Feb 20024.00%
0.00
Jan 20024.00%
0.00
Dec 20014.00%
0.00
Nov 20014.00%
0.50
Oct 20014.50%
0.25
Sep 20014.75%
0.25
Aug 20015.00%
0.25
Jul 20015.25%
0.00
Jun 20015.25%
0.00
May 20015.25%
0.25
Apr 20015.50%
0.25
Mar 20015.75%
0.00
Feb 20015.75%
0.25
Jan 20016.00%
0.00
Dec 20006.00%
0.00
Nov 20006.00%
0.00
Oct 20006.00%
0.00
Sep 20006.00%
0.00
Aug 20006.00%
0.00
Jul 20006.00%
0.00
Jun 20006.00%
0.00
May 20006.00%
0.00
Apr 20006.00%
0.00
Mar 20006.00%
0.00
Feb 20006.00%
0.25
Jan 20005.75%
0.25
Dec 19995.50%
0.00
Nov 19995.50%
0.25
Oct 19995.25%
0.00
Sep 19995.25%
0.25
Aug 19995.00%
0.00
Jul 19995.00%
0.00
Jun 19995.00%
0.25
May 19995.25%
0.00
Apr 19995.25%
0.00
Mar 19995.25%
0.25
Feb 19995.50%
0.50
Jan 19996.00%
0.25
Dec 19986.25%
0.50
Nov 19986.75%
0.50
Oct 19987.25%
0.25
Sep 19987.50%
0.00
Aug 19987.50%
0.00
Jul 19987.50%
0.00
Jun 19987.50%
0.25
May 19987.25%
0.00
Apr 19987.25%
0.00
Mar 19987.25%
0.00
Feb 19987.25%
0.00
Jan 19987.25%
0.00
Dec 19977.25%
0.00
Nov 19977.25%
0.25
Oct 19977.00%
0.00
Sep 19977.00%
0.00
Aug 19977.00%
0.25
Jul 19976.75%
0.25
Jun 19976.50%
0.25
May 19976.25%
0.25
Apr 19976.00%
0.00
Mar 19976.00%
0.00
Feb 19976.00%
0.00
Jan 19976.00%
0.00
Dec 19966.00%
0.00
Nov 19966.00%
0.00
Oct 19966.00%
0.25
Sep 19965.75%
0.00
Aug 19965.75%
0.00
Jul 19965.75%
0.00
Jun 19965.75%
0.25
May 19966.00%
0.00
Apr 19966.00%
0.00
Mar 19966.00%
0.25
Feb 19966.25%
0.00
Jan 19966.25%
0.25
Dec 19956.50%
0.25
Nov 19956.75%
0.00
Oct 19956.75%
0.00
Sep 19956.75%
0.00
Aug 19956.75%
0.00
Jul 19956.75%
0.00
Jun 19956.75%
0.00
May 19956.75%
0.00
Apr 19956.75%
0.00
Mar 19956.75%
0.00
Feb 19956.75%
0.50
Jan 19956.25%
0.00
Dec 19946.25%
0.50
Nov 19945.75%
0.00
Oct 19945.75%
0.00
Sep 19945.75%
0.50
Aug 19945.25%
0.00
Jul 19945.25%
0.00
Jun 19945.25%
0.00
May 19945.25%
0.00
Apr 19945.25%
0.00
Mar 19945.25%
0.00
Feb 19945.25%
0.25
Jan 19945.50%
0.00
Dec 19935.50%
0.00
Nov 19935.50%
0.50
Oct 19936.00%
0.00
Sep 19936.00%
0.00
Aug 19936.00%
0.00
Jul 19936.00%
0.00
Jun 19936.00%
0.00
May 19936.00%
0.00
Apr 19936.00%
0.00
Mar 19936.00%
0.00
Feb 19936.00%
0.00
Jan 19936.00%
1.00
Dec 19927.00%
0.00
Nov 19927.00%
1.00
Oct 19928.00%
1.00
Sep 19929.00%
1.00
Aug 199210.00%
0.00
Jul 199210.00%
0.00
Jun 199210.00%
0.00
May 199210.00%
0.50
Apr 199210.50%
0.00
Mar 199210.50%
0.00
Feb 199210.50%
0.00
Jan 199210.50%
0.00
Dec 199110.50%
0.00
Nov 199110.50%
0.00
Oct 199110.50%
0.00
Sep 199110.50%
0.50
Aug 199111.00%
0.00
Jul 199111.00%
0.50
Jun 199111.50%
0.00
May 199111.50%
0.50
Apr 199112.00%
0.50
Mar 199112.50%
0.50
Feb 199113.00%
1.00
Jan 199114.00%
0.00
Dec 199014.00%
0.00
Nov 199014.00%
0.00
Oct 199014.00%
1.00
Sep 199015.00%
0.00
Aug 199015.00%
0.00
Jul 199015.00%
0.00
Jun 199015.00%
0.00
May 199015.00%
0.00
Apr 199015.00%
0.00
Mar 199015.00%
0.00
Feb 199015.00%
0.00
Jan 199015.00%
0.00
Dec 198915.00%
0.00
Nov 198915.00%
0.00
Oct 198915.00%
1.00
Sep 198914.00%
0.00
Aug 198914.00%
0.00
Jul 198914.00%
0.00
Jun 198914.00%
0.00
May 198914.00%
1.00
Apr 198913.00%
0.00
Mar 198913.00%
0.00
Feb 198913.00%
0.00
Jan 198913.00%
0.00
Dec 198813.00%
0.00
Nov 198813.00%
1.00
Oct 198812.00%
0.00
Sep 198812.00%
0.00
Aug 198812.00%
1.50
Jul 198810.50%
1.00
Jun 19889.50%
2.00
May 19887.50%
0.50
Apr 19888.00%
0.50
Mar 19888.50%
0.50
Feb 19889.00%
0.50
Jan 19888.50%
0.00
Dec 19878.50%
0.50
Nov 19879.00%
0.50
Oct 19879.50%
0.50
Sep 198710.00%
0.00
Aug 198710.00%
1.00
Jul 19879.00%
0.00
Jun 19879.00%
0.00
May 19879.00%
0.50
Apr 19879.50%
0.50
Mar 198710.00%
1.00
Feb 198711.00%
0.00
Jan 198711.00%
0.00
Dec 198611.00%
0.00
Nov 198611.00%
0.00
Oct 198611.00%
1.00
Sep 198610.00%
0.00
Aug 198610.00%
0.00
Jul 198610.00%
0.00
Jun 198610.00%
0.00
May 198610.00%
0.50
Apr 198610.50%
1.00
Mar 198611.50%
0.00
Feb 198611.50%
0.00
Jan 198611.50%
0.00
Dec 198511.50%
0.00
Nov 198511.50%
0.00
Oct 198511.50%
0.00
Sep 198511.50%
0.00
Aug 198511.50%
0.00
Jul 198511.50%
1.00
Jun 198512.50%
0.00
May 198512.50%
0.25
Apr 198512.75%
0.75
Mar 198513.50%
0.50
Feb 198514.00%
0.00
Jan 198514.00%
0.00

Who determines interest rates?

The Bank of England’s Monetary Policy Committee (MPC) decides the fate of interest rates. They meet up every month and decide what the rates will be in the foreseen future.

Who forms the Monetary Policy Committee (MPC)?

The MPC is made up of the governor of the Bank, two deputy governors, a chief economist, a marketing director and four external members, appointed by the chancellor for a three year term. Each member has a vote of equal weight.

So they decide how much interest I pay?

Yes, that’s right. Initially, before 1997, it was the Treasury that set interest rates, but Gordon Brown granted the MPC powers to set rates when Labour came to power in 1997.

The idea of handing the responsibility over to the MPC was to prevent governments from using interest rates as a political tool. Additionally, to give a degree of independence between the economy and political concerns.

However, the government has the right to instruct the Bank on what rate to set when needed.

What is the main purpose of the MPC?

The Monetary Policy Committees (MPC) main role is to control inflation according to the government’s inflation target, which is set each year in the Budget.

Why do interest rates increase?

Essentially, rates are increased to control inflation. The concern is that rising prices will fuel higher pay demands which could push prices yet higher in an inflationary spiral.

Rates are increasing to encourage saving and discourage borrowing because that’s what the bank of england think will keep inflation at a sensible level.

What is inflation?

Inflation is an increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every pound you own buys a smaller percentage of a good or service. Basically, things are getting more expensive.

How do interest rates affect the housing market?

Changes in interest rates affect mortgage rates, either instantly or in the future if you are in a fixed-rate or discount deal. Depending on which way the change went, your mortgage payments will either increase or decrease.

Interest rates can also affect property prices. If interest rates rise, the property market could lose its appeal because mortgages become more expensive, consequently having direct impact on property prices. Of course, the opposite affect could happen if interest rates lower.

Join over

50,000

UK Landlords

Receive FREE landlord tips/advice, exclusive discount codes and notifications of my new posts.

Best Landlord Offers


Find Tenants Quickly on Rightmove for FREE

Advertise your property on Rightmove & Zoopla for as little as £45.


56% Upad Discount (includes Free Rightmove Premium listing)

UK’s largest online agent are currently offering exclusive discount vouchers.


Problem Tenants? Free Legal Advice Service

Free landlord legal advice and exclusive discounted rates!


Landlord Insurance Quotes

Complete a quick form and receive amazing insurance deals!


£5 Tenant Referencing Service

Reference your tenants for £5 (Inc VAT) with an exclusive discount code.


Fast Online BTL Mortgage Quotes (No Broker Fee)

2000+ live deals. Borrowers typically save £1,800.


Free Landlord Guide

Complete guide for new landlords, covering A-Z, no nonsense!

Popular Landlord Categories


Assured Shorthold Tenancy Agreements
Evicting Tenants & Ending Tenancies
DWP / DSS & Housing Benefit Tenants
Landlord Forms & Documents
Landlord Tax Advice, Finances & Saving Costs
Landlord Legal Issues
Managing Your Rental Property
Letting Agents
HMO (Houses In Multiple Occupation) Guides
Decorating, Repairs & Maintaining BTLs
Buying & Investing in BTLs
Landlord BTL Insurance Guide
Tenant Security Deposits
Finding Tenants & Marketing
Problem Tenants


Problem Tenants
Free Legal Advice
Free Tenant Eviction Advice

Find Tenants Quickly
& cheaply on Rightmove
Rightmove

New Landlords
Ultimate guide for newbies
Knowledge

Tenancy Agreements
Info & Easy downloads
Tenancy Agreements

Landlord Shop
Exclusive Prices & Discounts
Landlord Shop / Offers

A little introduction…

I initially started this website because I wanted to document my every step from property idiot to property landlord,
in hope that people would find my site and help me along the way. I literally didn’t have a clue about being a landlord
when I started this website.

Having expanded my property portfolio, I now occassionally blog about my bitter life as a Landlord…

Feel free to read more about me and my Landlord Blog or contact me directly.

This project started 4411 days ago.

Landlord’s Fav’s

  • Finding tenants
  • How To Advertise Your Rental On Rightmove
  • List Of Online Letting Agents 2018
  • Selling your property
  • List Of Online Estate Agents 2018
  • How To Privately Sell Your House On Rightmove
  • Free Property Valuation Service & Online Tools
  • Online Vs High-street Estate Agent Price Comparison Calculator
  • Landlord life
  • How To Become A Landlord
  • 15 Reasons Why Estate Agents Are Idiots
  • Reasons Why I Hate My Tenant
  • I’m Evicting My Tenant
  • Finance
  • Interest Rate Graph
  • Mortgage Overpayment Calculator
  • Rental Yield Calculator
  • Landlord Software Reviews

Important


It’s important you understand that this is a personal blog, and the aim is to provide the best
guides, tips, tools and techniques to being a Landlord gathered by personal experience, so the information is NOT guaranteed to be perfect, and should NOT be used as legal or financial guidance, so do note you use the information at your own risk and I can’t accept liability if things go wrong.
Please use the links below for more information:

  • Disclaimer
  • Terms And Conditions
  • Privacy Policy
  • Cookie Policy
  • Advertise / Sponsored & Guest Post Enquiries
  • © Property Investment Project 2018


Homepage

Accessibility links

  • Skip to content
  • Accessibility Help
BBC iD

Notifications

Search




News

BBC News Navigation

Sections

  • Home

  • UK

  • World

  • Business

    selected

  • Politics

  • Tech

  • Science

  • Health

  • Family & Education

  • Entertainment & Arts

  • Stories

  • Video & Audio

  • In Pictures

  • Newsbeat

  • Reality Check

  • Special Reports

  • Explainers

  • The Reporters

  • Have Your Say

  • Disability



Business



Business

UK interest rates rise for first time in 10 years

By Ben Morris
Business Reporter
  • 2 November 2017
  • Share

    These are external links and will open in a new window

    • Share this with Email

    • Share this with Facebook

    • Share this with Messenger

    • Share this with Messenger

    • Share this with Twitter

    • Share this with Pinterest

    • Share this with WhatsApp

    • Share this with LinkedIn

    Copy this link

    https://www.bbc.co.uk/news/business-41846330

    Read more about sharing.

Media playback is unsupported on your device

Media captionThe Bank of England may lift rates twice more over three years

For the first time in more than 10 years, the Bank of England has raised interest rates.

The official bank rate has been lifted from 0.25% to 0.5%, the first increase since July 2007.

It is likely to rise twice more over the next three years, according to Bank of England governor Mark Carney.

The move reverses the cut in August of last year, which was made in the wake of the vote to leave the European Union.

Almost four million households face higher mortgage interest payments after the rise, but it should give savers a modest lift in their returns.

As well as many of the country’s 45 million savers, anyone considering buying an annuity for their pension will also see better deals.

The main losers will be households with a variable rate mortgage.

  • What will the rate rise mean for you?
  • Kamal Ahmed: Are more rate rises ahead?
  • Five things we have learnt from the Bank

Mr Carney expects banks to pass on the rate rise to savers, but said many mortgages, loans and credit cards would not see an immediate impact.

He said that British households have been “savvy” with their finances and have mostly taken out fixed-rate mortgages, which means it will take some time before the rise has an impact on them.

The Bank estimates that almost two million mortgage holders have not experienced an interest rate rise since taking out a mortgage.

Of the 8.1 million households with a mortgage, 3.7 million – or 46% – are on either a standard variable rate or a tracker rate – which generally move with the official bank rate.

The average outstanding balance is £89,000 which would see payments increase by about £12 a month, according to UK Finance.

The panel which sets interest rates, called the Monetary Policy Committee (MPC), justified the rate increase by pointing to record-low unemployment, rising inflation and stronger global economic growth.

Seven out of the nine members voted in favour of higher rates.

Mr Carney told the BBC that the Bank expected the UK economy to grow at about 1.7% for the next few years, which he said would require “about two more interest rate increases over the next three years”.

Media playback is unsupported on your device

Media captionWe challenged some ten year olds to explain a system that baffles many adults…

The pound fell about 1% against the dollar and euro , as some investors had hoped to see hints of more rate rises. Sterling dropped more than a cent against the two currencies to $1.3130 and €1.1280 respectively.

Brexit impact

The financial markets are indicating two more interest rate increases over the next three years, taking the official rate to 1%.

Howard Archer, chief economic adviser to the EY Item Club consultancy, said: “The Bank of England seemingly sees the hike to 0.50% as more likely to be a case of ‘one and a little more to come’ rather than ‘one and done’.”

The MPC also said that the decision to leave the European Union is having a “noticeable impact” on the economic outlook.

  • Interest rates: How they voted
  • Quiz: Are you a monetary maestro?
  • Savings rates start to creep up
  • Rate rise: Winners and losers

Mr Carney said “Brexit-related constraints” on investment and workers appeared to be holding back the potential growth of the economy.

Looking ahead, he said: “The biggest determinate of our outlook is going to be those negotiations ongoing on Brexit – both a transition deal to a new arrangement and what is the longer form arrangement with the European Union.”

The Bank of England is tasked with keeping consumer price inflation at around 2%.

However, inflation has been running higher than that since February, and in September it hit 3% – the highest rate since April 2012.

Mr Carney said inflation was unlikely to return to 2% without raising rates, because the economy was growing at levels “above its speed limit”.

Media playback is unsupported on your device

Media captionWhere were you when interest rates last went up?

Business bodies said the rise was expected, but warned that companies could be hit if further increases came too soon.

The Federation of Small Businesses said some would struggle to “absorb more hikes in the short term”, while the CBI said “what’s important is the pace of any future rises”.

Economists said the rise was unlikely to have a big effect on the economy, because rates are still at the lows seen since the financial crisis.

Lucy O’Carroll, chief economist at Aberdeen Standard Investments, said: “The symbolism of this hike is more significant than its economic impact.”

Price pressures

The Bank has been reluctant to raise interest rates until now, arguing that inflation had been boosted by the fall in the value of the pound since the Brexit vote in June of last year.

That weaker pound has driven up the costs of imported food, fuel and other goods. The Bank says this effect is probably at its peak at the moment.

The other issue holding back the Bank has been the weakness in wage growth. While inflation hit 3% in September, wage growth was only 2.1%.

However, the Bank sees wage growth “gradually” increasing over the 2018 and says there are signs of that happening already.

In its Quarterly Inflation Report, released with the announcement on rates, the Bank estimated inflation was likely to peak this month at 3.2%.


Do you have a question about the interest rate change? What do you need to know about the change? E-mail us at haveyoursay@bbc.co.uk .

You can also contact us in the following ways:

  • Tweet: @BBC_HaveYourSay
  • WhatsApp: +44 7525 900971
  • Text an SMS or MMS to 61124 (UK)
  • Please read our terms & conditions

Or please use the form below:

Related Topics

  • UK economy
  • Personal finance
  • Monetary Policy Committee (MPC)
  • Bank of England

Share this story About sharing

  • Email

  • Facebook

  • Messenger

  • Messenger

  • Twitter

  • Pinterest

  • WhatsApp

  • LinkedIn

More on this story

  • Interest rates: What the rise means for you
    2 August 2018

  • Kamal Ahmed: Are more rate rises ahead?
    2 November 2017

  • Five things we have learnt from the Bank of England
    2 November 2017

  • Some savers see early benefits from base rate rise
    2 November 2017

  • Interest rate rise: What you are saying
    2 November 2017

  • Video

    We challenged 10-year-olds to explain a system that baffles many adults…

    2 November 2017

  • Quiz: Are you a monetary maestro?
    2 November 2017

Top Stories

PM meeting EU leaders for Brexit talks

Angela Merkel says the EU will not renegotiate but is hopeful of helping Theresa May get her deal through.

11 December 2018

Brexit vote: What could happen next?

11 December 2018

Man held by armed police at UK Parliament

11 December 2018

Features

The bar where your cash is worthless

Now what for the PM and Brexit?

How foreign powers have stopped pirates in Somalia

‘Our son should know his egg donor’

Is there room for two Mowglis in the Hollywood jungle?

Reality Check: Is football racism rising?

Why are so many countries now saying cannabis is OK?

‘Taking the guilt out of feeding our babies’

Reality Check: Does Brussels blink?

Elsewhere on the BBC

Snowman cupcakes

A festive recipe perfect for adults and kids

Full article Snowman cupcakes

Daily news briefing direct to your inbox

Sign up for our newsletter

Full article Daily news briefing direct to your inbox

Why you can trust BBC News

BBC News Navigation

BBC News Services

  • On your mobile
  • On your connected tv
  • Get news alerts
  • Contact BBC News

Explore the BBC

  • Home
  • News
  • Sport
  • Weather
  • iPlayer
  • Sounds
  • CBBC
  • CBeebies
  • Food
  • Bitesize
  • Earth
  • Arts
  • Make It Digital
  • Taster
  • Local
  • Tomorrow's World
  • TV
  • Radio