Interest Rates Increase – The Bank of England base rate is at the lowest it has ever been for years, so how come interest rates on loans and mortgages are increasing?
The current Bank of England base rate as I write this is 0.10%, which is only a fraction above zero. This is primarily due to the poor state of the general UK economy at the moment, which is due in no small measure to Coronavirus Covid-19.
Why Are Interest Rates Going Up?
Lenders preceive that there is a higher risk to the majority of new lenders applying, as the financial situation is so uncertain at the moment. People have lost their jobs and are now unemployed, others are on furlow and it is highly possible they could be eventually paid off as well. Those who are still in a job do not know from month to month if they will retain their jobs either.
This is making lenders nervous and so interest rates go up to reflect this. Some mortgage companies are now only receiving new applications from people that have a credit score of 900 or more.
Shop Around Before Interest Rates Increase
Have a good look around if you are the market for new credit. If it is an unsecured personal loan, then also look at the zero percent credit card offers too.
Some credit cards give 0% on purchases and others will give you 0% if you transfer a balance to them.
Remember to check your credit score online before you go “shopping” to make sure everything is in order on your credit file.
There are some good credit deals for loans and credit cards to take advantage of right now, but in light of the pandemic there is no guarantee these will not get worse in the months to come should lenders change their risk criteria.