‘Rising interest rates mean I owe £250 a year more on loans’

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Patrick Reid owes £25,000 in loans and credit cards

The Bank of England has hiked interest rates by half a percentage point – the highest amount in 27 years.

Rising interest rates can affect people in different ways, often creating additional costs and worries.

But while it may increase the cost of borrowing, hit business plans or mortgage hopes, savers can give it a little boost.

The BBC spoke to five people about how higher interest rates would change their situation.

“I’m going to have to find an extra £250 a year to cover my debts”

London-based Patrick Reid owes thousands of dollars on credit cards and loans and fears rising interest rates will cost him.

“I have personal loans and credit cards totaling £25,000 so any increase will be extremely noticeable.

“At the moment I’m paying around £1,800 a month, but I’ve calculated that I’ll have to cautiously pay an extra £250 a year to meet the debts.

“My income is good as I own my own business and I hope that will continue – but if my clients drop out it will be financially painful.

“I’ll just have to tighten my belt and be extra careful with my spending, which means all those non-essential items will be cut from my budget.

“I am very worried about future rate hikes. Honestly, I don’t think the UK can accept another hike. It will cripple the economic outlook and businesses will suffer.”

This story has been updated to clarify that the £250 due was annual, not monthly.

“It’s an endless cycle of trying to make ends meet”

Wayne Trim, 38, works as a customer service manager at Morrison’s in Verwood, Dorset. He worries about the impact of rising interest rates on his mortgage.

“My mortgage payments were £416 last year and now they are £515 and will continue to rise.

“It might start to get in the way of my commute. I moved to a new store a short time ago. It’s an hour’s drive away. They gave me a raise to move stores, but i needed a new car which took me quite a while my salary is increasing.

“I bought a hybrid. I spend around £200 a month filling it up.

“If you look at everything in the world, everything goes up. Fuel, food. We can look at the grocery store and be a little more crafty with it. I get a discount to work at Morrison.

“You think you’re in a position where you’re financially comfortable, and then all these things start. It’s like an endless cycle of trying to make ends meet.

“I’m also paying off some loans, around £270 a month. That finishes in April, so I’m looking forward to it.

“I’m a simple person. I don’t understand why they’re raising rates. They tell us it’s to limit borrowing, but all that means to me is canceling Netflix and Amazon.”

“We can’t afford to move if rates go up”

Louise Parker

Louise Parker

Louise Parker and her husband have been saving to move to Brighton since 2020, but have to rethink a lot due to rising interest rates.

“I know we’re in a very privileged position to be in a home that we own in the first place with a decent mortgage rate set for two years.

“But we’ve had to significantly reconsider how much money we can borrow. That means we’re looking at smaller homes which, given that we wanted to move to start a family, makes us wonder if we shouldn’t take hard to move.

“Our options are either to stay where we are or to move to something around £200,000 cheaper than we had hoped.

“We’re also worried about how long we’d have to repair if we move. We don’t want to be stung after two years if rates have gone up again, or if we have to downsize because we can no longer afford refunds.

“It’s just such an adjustment to have to think about interest rates. It’s a new hurdle in the mix.”

“A rate increase will help my savings”

Edmond Wood

Edmond Wood

Edmund Wood is saving to buy a house near London and hopes rising interest rates will help his deposit grow faster. He also hopes the rate hike will help the rum business he owns.

“A rise in interest rates is good for me. I’m saving a deposit, so more interest will mean my savings will grow faster.

“And as I look further into buying a home, I worry about rising house prices – they have been climbing every month for the past 12 months in a row.

“It wouldn’t be good if I was ready to buy now, but in two years, when I’ve saved during a period of rising interest rates, I hope house prices will fall again, which which will put me in a better position to buy .

“I also hope that by then interest rates will have stabilized somewhat, which means I can get a stable interest rate on a mortgage.

“I think rising interest rates will also be good for my rum business if it brings inflation down. This in turn should reduce the cost of living, leaving people with more money in their pockets. at the end of the month.”

“Higher rates will affect my business expansion plans”

Paola Dyboski

Paola Dyboski

Paola Dyboski runs a small manufacturing business in North Wales called Dr Zigs Extraordinary Bubbles and fears rising rates could jeopardize her expansion plans.

“We are ambitious and are currently expanding globally and finding growth in export markets.

“But, with expansion on the cards, we would look to borrow to increase production and releases and manage that growth.

“Rising interest rates will make this extremely more risky and difficult. It will call into question the viability of our manufacturing base in the UK.

“I am also concerned that if our business customers cannot borrow, then they will reduce their spending and purchases from us. We will all be affected.”

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