Interest rates to stay the same despite inflation drop
Interest rates have been held at 5.25% for the tenth consecutive month, despite hopes that falling inflation would result in a cut.
Before August last year, the base rate was raised for 14 months in a row in a bid to control spiralling prices. When interest rates are higher, people tend to spend less, which usually causes prices to rise less quickly.
Inflation drop
Yesterday (Wednesday 19 June), the Office for National Statistics (ONS) revealed that annual inflation dropped to the Bank’s 2% target in May, down from 2.3% in April.
Despite this, the Bank still thinks a base rate cut would be premature.
This may be because, although the rate at which food prices are growing has slowed, this is not the case for things like fuel.
Plus, inflation of service costs and home ownership expenses only fell from 5.9% to 5.7% between April and May.
The ONS figures suggest that while prices are still increasing, they’ve been rising slower since July 2021. On top of this, wages increased by more than inflation.
Market analysts predict a rate cut is likely in August or September.
Worried about paying your rent?
If your landlord is facing higher buy-to-let mortgage costs, it’s possible they may want to up your rent. In this situation, it’s important to know your rights. Generally, your landlord can only increase your rent once a year by a reasonable amount.
Get more help with managing rising rents and mortgage interest rates.
Struggling to keep up with your mortgage?
If you’re worried about staying on top of your mortgage payments, there is help available. The mortgage charter allows you to switch to interest-only payments or extend the term of your mortgage for six months.
This won’t affect your credit score and can be done without affordability checks.
Don’t bury your head in the sand, your lender has a responsibility to help and they’re used to supporting people in financial difficulty.
Are you in debt?
If you’re behind on your payments, we’re here to help.
We give free debt advice online or you can give us a ring. Whether you need budgeting help, advice on your benefit entitlement or information on debt solutions, we’re here for you. All advice is free and impartial. Some debt solutions are also free, some have a fee.
Connie Enzler
With a master's in multimedia journalism and over five years' experience as a digital writer and podcast creator, Connie is committed to making personal finance news and information clear and accessible to everyone.
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