On this episode of the Money Confidence podcast, Sarah and Georgia discuss how the rising interest rates may affect you.

KEY TAKEAWAYS

Increasing interest rates is one way to try and control inflation as it raises borrowing costs and should encourage people to borrow and spend less. It can also encourage people to save more.

However, many households will be squeezed further following the interest rate rise including some mortgage-holders.

The Bank of England has warned the UK will fall into recession as it raised interest rates by the most in 27 years.

Interest rates in the UK rose to 1.75% as the Bank battles to stem soaring prices, with inflation now set to hit over 13%.

Because higher interest rates mean higher borrowing costs, people will eventually start spending less. The demand for goods and services will then drop, which will cause inflation to fall. Similarly, to combat the rising inflation in 2022, the Fed has been increasing rates throughout the year.

Rising interest rates is a positive for savers.

When interest rates increase, there's usually trouble for bonds and equities.

BEST MOMENTS

'I am getting my moneys worth, definitely.'

'My parents told me that back in the day when they were younger the interest rate was 15% to 16%.'

'Interest rates rose to 1.75% in the UK.'

'homeowners on a typical tracker mortgage will have to pay about £52 more a month. Those on standard variable rate mortgages will see a £59 increase each month.'

'Borrowing becomes more expensive.'

'Savings rate increase.'

'Most bonds pay a fixed interest rate that become more attractive as interest rates fall.'

'The relationship between equites and interest rates is less direct.'

'The good news though is that the currency strengthens.'

'It could be good if you're going on holiday then.'

ABOUT THE HOSTS

Sarah is a Chartered Financial Adviser and Certified Financial Coach and Georgia is a Senior Paraplanner. Together, they have over 20 years experience in financial services and are on a mission to educate others about money in a fun and non-jargon way. They will help you master your finances and money mindset so that you feel more confident with money and the decisions you make around money. They talk all things money from investments, pensions and benefits to your mindset around money and steps you can take to improve your relationship with money. They aim to make it fun, educational and are with you every step of the way. Together, you've got this!

The information given in this podcast is for your entertainment and should not be construed as financial advice. No liability can be accepted for any individuals relying on this information without seeking specific advice and guidance. As always, take independent financial advice before making any investment decisions. Our discussions are based on tax and legislation in England which may change.

CONTACT METHOD

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