This month, the Bank of England announced an increase in the base interest rate for the first time in a decade. This comes as The Money Charity’s November Money Statistics reveal that personal debt has hit a new high of £30,096 per adult in the UK (£1,557 trillion in total).
Whilst it is important to acknowledge that this is good news for savers and people buying an annuity, the rise has potential downsides for those with variable rate mortgages or loans. For example, as of September 2017, households pay an average of £1,841 in annual interest repayments – £964 per person.
The latest Money Statistics find that 35% of all UK households have no savings whatsoever, and a further 11% have less than £1,500 of savings. Furthermore, net lending to individuals by UK banks and building societies increased again in September, by an average of £158m a day.
We at The Money Charity welcome policies which benefit consumers potential income, as well as an incentive to save more. However, after 10 years of low interest rates, as well as little to shout about in terms of savings ratios and real-term wage increases, it is concerning how many people may be hit by this rise, as well as any potential future rises in interest rates,given the record levels of personal debt.
Steph Hayter, Acting Chief Executive of The Money Charity says:
“The interest rates rise is good news for encouraging Brits to save, which is vital for financial resilience. However, it will have an impact on those with large outstanding debts, who were only just about managing before the rate rise. This could mean that they are no longer able to get by.”
Other key points from the November Money Statistics include:
- The UK economy grew by 0.4% in Q3 according to estimates from the Office of National Statistics.
- The government borrowed an average of £8.2m a day in September 2017.
- APR on a £5,000 personal loan decreased by 1.31% over the past year according to the Bank of England.
Get the full picture, and many more fascinating facts about money in the UK in our monthly Money Statistics.