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Interest rate change

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What might current interest rates mean for your money?

Things to think about to help make the most of today’s interest rate cut.

The Bank of England’s (BoE) decision to lower interest rates to 4.25% this week creates an opportunity to take another look at how you organise your money – for today and the future.

Mortgages, savings accounts and any investments you have may be affected. And those changes could have a knock-on effect for your longer-term plans.

While interest rates tend to move bit by bit, it can all add up to affect your money over time. To deal with this, we believe it’s important to take your time and consider all your options.

Three areas to think about

Lower interest rates could lead to a number of possible outcomes, which include:

  1. Lower interest rates on savings accounts – despite this, it can be important to keep money in such an account ready to use for emergencies.
  2. Anyone borrowing money, including those with a mortgage,  could find they are paying less interest.
  3. Lower interest rates could potentially benefit those who invest over time as they could be good for companies’ share prices.

Putting the right mix of these things in place  could help you get exactly what you want from your money over the years to come. 

What next for UK interest rates?

A slow-growing UK economy means inflation has gradually fallen this year, from 3% in January to 2.6% in March.

This means we’ve seen gradual UK rate cuts since last August. A big reason why the BoE raises rates is to help tackle rising inflation, but that’s not necessary at the moment.

Despite some doubts due to US President Trump’s trade tariffs, market analysts still expect the BoE to lower interest rates even more this year. Economists currently expect two more rate cuts in 2025.

We don’t know for sure if these changes will happen, but one thing is more certain. Whether interest rates fall quickly, slowly or not at all, organising your finances for the future could benefit you and your family.

If you would like to know more about investing with us, take a look at our various options.

This article should not be taken as a recommendation or advice.

 

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