The Bank of England voted to increase its base interest rates for the 12th consecutive period yesterday.
The 0.25% rise sees interest rates hit 4.5%, causing worries for anyone looking to loan money.
ShefNews spoke with Courtney Wilson, Financial Journalist at International Tax Review, and she broke down what the increase really means.
What does an increase in interest rates mean?
“Well, it’s decided by the bank of England. It makes borrowing more expensive, and it aims to tackle inflation. The idea is people will spend less and save more, and whilst it benefits banks, if I had a mortgage I’d be in trouble.
“It’s virtually impossible to get onto the property ladder, and even though it’s great for banks, insurance companies, and broker firms, lower-income families will struggle to find money to afford houses or flats.”
Couldn’t encouraging people to spend less be bad for the economy?
“That’s the argument, loads of people disagree, if the model worked it would’ve worked for all the big crashes.”
Do you think it will work?
“It’s very hard to say, I’m a pessimist, and I think if it does work, it wont work for a while. I think we’re going to experience a big crash, and then something will have to be done.
“During COVID-19 the UK took lots of support, and we do have an obligation to pay that back, there was the furlough scheme, and perhaps that’s why we’re in a financial deficit.
“But when it comes to if it will work, the best answer I can give is ‘How long is a piece of string?’ I think it depends on our leadership which I don’t have much faith in.”
The current Interest rates are the highest they’ve been since the housing market crash in 2008, and whilst there’s no certainty when they will start to come back down there’s one thing that’s certain, it won’t be anytime soon.