We are all starting to notice the increase in the rising cost of living, everything is getting more expensive. 2022 is set to bring some challenges, and the main reason is the fallout from the pandemic. The pandemic has played a role, from energy prices to inflation to struggling health services, and on top of all of this the Bank of England has raised the base interest rate to try to slow down price increases.
How could the rising cost of living impact you?
The impact to you will differ from others, for example, if you are saving for your first home, you may be impacted by the rising base rate. If the interest rate is higher, it will be more expensive to borrow money. The recent increase in the base rate means that any mortgage you look to take out will now certainly come with larger repayments in the future. We are speaking with our clients who are looking at remortgaging to discuss the right mortgage for them due to the interest rate rises which are bound to keep happening throughout the year.
Savings
If you are looking to save money for the future then a rise in interest rates may be beneficial. Within the UK the low interest rates may have meant that families have not been able to build up savings and have instead put money into ISAs or investments. While the current rate of 0.5% (February 2022) is still not the same as an ISA, a rising interest rate may make opening a savings account an option worth considering.
The Bank of England stated that the current rate of inflation could last until the second half of 2022, before returning to more normal levels at some stage in 2023. When the Bank of England raises interest rates, it is telling people to begin saving and protecting their money. Therefore if you have any outstanding debts, try to start paying off as much as you can. Do you need to remortgage or consolidate any of your debts? If so then speak to a mortgage broker who can find the best rates for your situation.
A rising cost of living can be a cause for concern but speaking to us and taking the right steps to protect your money will ensure financial wellbeing for the future.
*Your home may be repossessed if you do not keep up repayments on your mortgage.
*Investments carry risk. The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested.