Households need to prepare now for the ‘new normal’ of higher interest rates

The Bank of England Monetary Policy Committee has today voted to increase interest rates to 0.75 percent, its highest level since 2009.

Jane Tully, director of external affairs at the Money Advice Trust, the charity that runs National Debtline, said: “Households need to prepare now for what could be the ‘new normal’ of higher interest rates in the coming years.

“Today’s small rate rise will not on its own cause problems for the majority of people, and with most mortgages on fixed rates the full impact on household finances will not be felt immediately. However, we know that even a small increase in costs can be all it takes to push some households with already stretched budgets in to difficulty.

“For the first time in nearly 30 years, UK households are now spending more than they have coming in. Combined with slow wage growth and increasing living costs, interest rate rises like today’s will add to the challenges facing the many people already struggling.

“With advice agencies continuing to experience high levels of demand for their services, it is crucial that lenders, government and the advice sector work together to make sure people affected receive the support they need.”