For the last couple of months the Bank of England has been preparing all of us for today’s 0.25% increase so it shouldn’t have come as a shock that the base rate has increased, but what does it actually mean to the general public and more importantly people with mortgages which are now more expensive to service per month?

At the time of writing, using our super quick Harris 24 panel, we had gathered over 700 responses within 3 hours of the BOE announcement. Here are the key results from that survey:

• 28% of the population think they will be worse off as a result of the increase, rising to 34% of those with a mortgage
• A staggering 18% of mortgage holders don’t realise that the rise may mean their mortgage repayments increase, particularly evident amongst 18-34 year olds (29%) who will have little or no experience of rate rises as mortgage holders
• As a result of the increase, 34% of mortgage holders expect to have to cut back on non-essentials and 21% on essentials
• For the time being, 1 in 10 (9%) mortgage holders think the rise will mean they start to have difficulties with their personal finances
• Half (50%) anticipate this being the case if interest rates were to increase by a further 0.5%.

So from our research the general feeling out there at this moment in time is that the general public with mortgages feel that they can cope with today’s base rate increase. This should be fine as the BoE says that future increases if needed will be gradual.

But is it?! In our view it is early days, people have not yet considered the impact of other factors mentioned in the BoE inflation report issued shortly after the base rate announcement. These include:

• Prices for goods (food etc.) are rising quicker than the BoE inflation target
• The pound’s value remains low therefore pushing up the cost of imported goods (electronics, cars, etc.) and holidays abroad.

All in all this vice-like grip is slowly tightening on consumers’ everyday spending and if it continues will also impact on major family purchases in the future.

Factor in that variable mortgage payment increases will impact around the Christmas period, and in the New Year credit card bills start arriving when a lot of people plan and pay deposits on their summer holidays. 2018 could really be a watershed year for the average family!

How will it impact your family?  Get in touch to find out how Harris 24 can help you get the answers you need quickly.

Harris 24 survey conducted by Harris Interactive on 2nd November 2017 immediately following the announcement, between the hours of 12.00 midday and 3.00pm amongst a sample of 737 UK adults aged 18+.