Topic: Interest Rates

What will happen to your investments if interest rates rise tomorrow?

Interest rates rise

The question everyone wants answered.

Only time will tell however a small and steady rise won’t hurt funds but a steep increase may. Depending on your attitude to risk if looking at long term investments of 10 years or more, much will stay the same.

Long term we can see a benefit for the saver. Savers should enjoy some relief if the Bank of England’s Monetary Policy Committee does increase base rates by 0.25 per cent to 0.50 per cent tomorrow, in what will be the first hike in a decade.

This is likely to trigger a savings war, as banks and building societies respond by increasing their own rates in return.

However, Anna Bowes, director of independent savings advice website Savings Champion, said “with the consumer price index now at 3 per cent savers still cannot secure an inflation-beating return.”

Those with mortgages have had it good for 10 years or so. Can they really complain now?

1st Financial Foundations