Interest rates held at 4% as Bank of England says UK ‘not out of the woods’ on inflation – live updates

Michael Race
Senior business and economics reporter

Image source, PA Media

It’s the main question we all ask, but the answers depend on your individual circumstances.

Broadly speaking though, when rates are increased, borrowing becomes more expensive and returns on savings go up. The opposite happens when rates are lowered.

To put this into context, mortgage rates are often one of the first things a lot of people mention when interest rates are decided but only a third of people have a mortgage.

And the vast majority of mortgage holders are on fixed deals, so regardless of today’s decision there is no change for them.

Those looking to buy a home, coming to the end of a fixed deal, or on a tracker mortgage, will likely be watching today’s news closely, but given rates were held today, again, there’ll be no change.

When it comes to day-to-day spending, higher rates tend to mean increased charges for unsecured loans and credit cards.

Interest rates remaining at 4% could also be welcome news for those on the cusp of retirement, who might get a better annuity rate than if they were cut.

This determines how much guaranteed income you get, when you swap some or all of your pension pot for a secure income.