Seven in 10 Brits don’t know what Bank Base Rate is
A massive 70% of the nation can’t accurately pinpoint the current level of the Base Rate, according to new research from MoneySupermarket.
The price comparison site also found that the majority don’t know what the term ‘interest rate’ means – let alone the effect a rate rise could have on their everyday finances.
The news come amid speculation of a potential rate rise in November, which would see many borrowers face increased monthly mortgage repayments.
But just one in 100 Brits understands that a hike from current 0.25% Base Rate, the first in a decade, would affect their mortgage repayments in this way.
The research also highlighted a knowledge gap between generations, with a huge 81% of 18-24 year olds not understanding the term ‘interest rate’, compared to just over half (57%) of 45-54 year olds.
What’s more, 40% of men were able to identify the current Base Rate compared to just a quarter of women (25%).
There was also a clear gap among different areas of the UK. People in the South West were the most knowledgeable, with 45% of respondents correctly stating the Base Rate, followed by 35% in the South East and Northern Ireland. However, only 14% of those in Wales were able to provide the right figure, the lowest of all the regions surveyed.
Sally Francis, money expert at MoneySuperMarket, said: “There’s been very little movement in the Bank of England Base Rate since 2009 so it’s understandable that most Brits aren’t sure how a shift could affect their finances. The anticipated rise of 0.25% might seem small but it could pave the way for a string of increases that could impact some of the biggest bills.
“A rise in the Base Rate is good news for savers, but if you’re on a tracker mortgage your monthly instalments will rise as soon as any Base Rate increase is announced. If you’re on a capped or discount mortgage, you could also see increases so acting immediately could save you thousands in the long run, especially if Base Rate continues to rise. Switching to a fixed rate mortgage ensures that your monthly repayments stay the same for the duration of your fixed period, providing certainty and stability in your finances.”