The rise in inflation and interest rates


With the rise in inflation and interest rates, Barlow Irvin’s Practice Principal, Gary Oxborough, explores this in detail.

The flow of news around inflation and interest rates is non-stop now and I have spoken about interest rate increases a lot lately. This month I wanted to touch on the relationship between inflation and interest rates.

The Bank of England have a responsibility to keep inflation under control in the UK, they have said that it is their number 1 priority. As you will know, inflation is currently way in excess of the 2% that is the Bank’s target. While we are all aware that there are lots of causes of this, especially fuel costs, the Bank still must try and bring the inflation rate back under control. One of the main tools they have is to increase the base rate of interest. The idea behind doing this is that it will reduce people’s desire to borrow money for non-essential purchases and encourage more savings, which should slow spending and therefore push prices back down. Of course, this only helps with “discretionary spending” on things that are not essential needs and essentials are increasing in price.

If inflation is a worry for you, the best advice we can give is to be prepared and have a review of your finances. The first stage is to get a full bank statement and work through all your outgoings and see if there is anything that you are paying for where you no longer need and if there is anything you can get cheaper elsewhere. If you can pay down existing debts, especially the expensive ones such as credit cards, then that will help in the future. The most important thing, as always, is to know what your finances are like and take professional advice if needed.

As always, your personal circumstances are the most important part of any conversation we have around mortgages, so please get in touch if you have any questions or concerns.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments

About the author 

The Barlow Irvin Team

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