The Bank of England are due to meet again on 3rd November 2022
But what exactly does that meeting mean for the ordinary person? It can effect the lives of every day people in many different ways. The Bank of England base rate essentially sets the tone for the major UK banks in terms of how much they charge to lend money out. As a lot of them borrow money off the Bank of England and then lend it between themselves. At a core level though what does the Bank of England meeting mean for every day people? Let’s look at that in more depth.
Variable and tracker mortgage rates
Typically speaking, most lenders base their standard variable rates off the Bank of England base rate. This means that when the BoE increase or decrease this rate, banks and building societies then move their variable rate. The same is to be said for tracker rates and even discount rates. Tracker rates typically track at a certain percentage above the base rate. So if the tracker rate is 1% above the base rate, then at time of writing, the overall rate would be 3.25% (2.25% base rate at time of writing).
If you have fallen onto the variable rate, this can be quite extortionate compared to fixed, tracker or discount deals. Typically speaking, variable rates are usually the worst interest rate offered by a lender although this is not always the case. Either way it is definitely worth looking at remortgaging to fix in a new deal that can save you each month. It’s one of those things that is worth keeping an eye on. It’s a lot to do with what does the bank of England meeting mean for you.
The costs of loans and credit cards
What does the bank of England meeting mean for cards and loans? Well these will also see an increase. You will notice that it will be more expensive to get that car loan or take that card out to buy a new Gucci bag. Again, this is all part of the bank’s attempt to squeeze people’s finances. APR costs will be going up and it’s predicted that these will rise quite steadily for the months to come before flattening out. Unfortunately we are at the end of the era of cheap lending it would seem.
What the Bank of England are trying to achieve
They are trying to make borrowing money more expensive. By doing this, people have less access to ready money to spend on everything from houses, to potatoes and all that comes in between. With less spending going on, there is less demand for goods and services. With less demand, prices then come down in line. This is their theory and it tends to be proven right but it takes quite a long time for it to hit all consumers pockets hard enough to actually reduce inflation. I
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