The Bank of England has held the base rate at 5.25% again in June, the seventh consecutive time that rates have remained unchanged.

The base rate remains at its highest level since the financial crisis of 2008.

The past couple of years have seen rates rise 14 times in a bid to curb rampant inflation. These increases appear to be having the intended effect, with inflation easing from 2.3% to 2% in the 12 months to May, meaning it has finally reached the government’s long-term inflation target.

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “The Bank of England’s decision to hold the benchmark interest rate at 5.25% for the seventh consecutive time may have been anticipated by the financial markets but that won’t ease the disappointment for borrowers hoping for some respite from persistently high borrowing costs.

“What might also be worrying is the lack of movement on the rate-setting Monetary Policy Committee’s voting pattern with seven in favour of holding the status quo and two calling for a reduction – mirroring the decision at the meeting in May. It means hopes of a summer rate cut in August may also get dashed.

“Despite inflation hitting the 2% milestone in the 12 months to May, the BoE is erring on the side of caution for now as it waits to assess if sticky services inflation – which came in at 5.7% – will continue to remain high. The BoE’s decision also avoids a rate cut move becoming politicised in the run up to the General Election polling day.”

Here, we explain what rates being held at 5.25% might mean for you, and whether it’s likely to impact your finances.

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Your savings

Savings rates remain competitive, and hopefully the decision to leave the base rate unchanged won’t have a significant impact on them, although we have already started to see some returns nudge downwards.

Myron Jobson, senior personal finance analyst at interactive investor, said: “With a cut in the base rate a question of when, not if, the best savings rates are on borrowed time. The simple message for savers is to get a move on to nab the best deals before they’re gone. Those who can afford to put money away for at least five years or more should consider investing for the potential of long-term inflation-beating returns that far outstrip savings rates.”

You can find details of current best fixed rate savings accounts, updated weekly, in our article Fixed rate savings bonds explained.

As Mr Jobson says, those with longer-term savings goals – more than five years and ideally at least 10 – and who are comfortable accepting a level of risk, may want to consider investing some of their money in the hope of generating inflation-beating returns. However, remember that there’s a chance you could get back less than you put in, so investing isn’t for the faint-hearted.

Find out more about whether investing some of your savings could be right for you in our guide Investing – the basics.

What you can do

Even though interest rates haven’t changed this month, it’s essential to make sure your savings are working as hard as they possibly can for you.

Check savings websites such as SavingsChampion, or price comparison sites such as Moneyfactscompare.co.uk, uSwitch or GoCompare to see if you can find a higher interest paying account to move to, although it might be worth holding fire for a week or two to see which providers raise rates. Learn which providers are paying the highest returns on easy access accounts in our guide to the Best instant access savings accounts. If you’re looking for a cash ISA, you can find the best rates in our article Best cash ISA rates – which cash ISAs pay the most interest?

If you have money in a fixed rate savings account and you think you could do better elsewhere, check what the penalties are for closing your account. In some cases it may just be a few months’ interest and you may be better off moving your money to an account paying higher returns. As mentioned you can find the current best fixed rate savings rates in our guide Fixed rate savings bonds explained.

Your pension

If you’re approaching retirement and considering using some or all of your pension savings to buy an annuity to provide you with an income, then the fact that interest rates have been left unchanged is good news.

According to analysis by Hargreaves Lansdown, a 65-year-old with a £100,000 pension is able to get up to £7,222 per year from a single life level annuity with a five-year guarantee. This is well over £2,000 more per year than they would have got three years ago.

However, Helen Morrissey, head of retirement analysis at Hargreaves Lansdown said: “Clouds are gathering on the horizon, with the prospect of interest rate cuts this year. The expectation is that annuity incomes will also fall back. It will prompt increased interest over the coming months from retirees looking to secure the best deal for their retirement income before a chill sets in.”

If you’re thinking about getting professional financial advice, you can find a local financial adviser on VouchedFor or Unbiased.

Alternatively, if you’re looking for somewhere to start, we’ve partnered with independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.

Fidelius are rated 4.7 out of 5 from over 1,000 reviews on VouchedFor, the review site for financial advisors.

Your mortgage

The Bank’s decision to hold interest rates at 5.25% for a seventh time is likely to come as a disappointment to homeowners, many of whom are facing a sharp jump in their monthly payments when their fixed rate deals come to an end.

Sarah Coles, head of personal finance at Hargreaves Lansdown said: “It’s yet another kick in the teeth for those on variable rate mortgages, who’ve been holding out for a rate cut for almost a year. They’re still likely to get a cut in August or September, and possibly two by the end of the year, but that’s not going to move the dial anywhere near as much as they will have expected when they remortgaged onto a variable deal in the hope that rates would fall swiftly and often.

“For those who need to remortgage in the near future, rates have actually risen fractionally since the last MPC meeting – with Moneyfacts showing the average two-year fixed rate has risen from 5.93% to 5.97%. It’s only a tiny change, but given how many people are holding out for a cut, it’s a gut punch. They might have hoped that the prospect of the first rate cut in the next few months would bring some hope. However, with only two pencilled in for the next six months, even more of the 1.5 million people remortgaging in 2024 could see their mortgage payments double.”

You can find out more about remortgaging in our article Should I remortgage now? and why mortgage rates move even when the base rate has stayed the same in our guide What are swap rates and how do they affect my mortgage?

What you can do

If you’re on a fixed rate mortgage, you don’t need to do anything – for now. If you’re on a standard variable rate, you may want to remortgage to a cheaper deal if you can find one. You may also want to start looking round for a new deal now if your current mortgage deal is due to end in the next few months, as you can usually secure your next mortgage three to six months before you want it to begin.

If you’re planning to remortgage and are looking for a place to start, we have a mortgage affordability calculator, which will give you a rough estimate of what you might be able to afford, based on current market conditions.

Once you have a rough estimate, it can be helpful to compare different mortgage options to understand what your monthly repayments are likely to be.

Unless your situation is very straightforward, you may want to seek professional advice from a broker to find the best mortgage option for you. The advantage is that they will know which banks and building societies are more likely to accept your application. It’s definitely worthwhile if you are self-employed (unless you have been so for years) or your credit rating isn’t excellent.

Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.

If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,000 reviews.

If you’re finding it hard to keep up with your mortgage repayments, please don’t suffer in silence. Our article What can you do if you can’t pay your mortgage? explains what to do if you’re struggling with higher costs.

Your credit card and loans

The fact that rates haven’t changed means that hopefully we won’t see many changes to the cost of other types of borrowing, such as loans, credit cards and overdrafts.

Alice Haine of Bestinvest said: “High borrowing and living costs over a sustained period mean that niggling credit card debts are now denting people’s ability to secure a mortgage. Outstanding balances on credit cards rose an annual rate of 9.9% in the 12 months to March 2024 with around half of these incurring interest, something mortgage brokers cite as a barrier to mortgage finance as unsecured debts can impact an individual’s affordability level.

“High borrowing costs are also a curse for those saddled with heavy debts with the cost of servicing debt, such as loans, overdrafts and credit cards remaining high. This is why using credit to fund everyday living expenses must only be a last resort or at the very least remain a short-term solution.”

What you can do

If you’re paying a high rate of interest on your credit card borrowing, try and get a 0% balance transfer credit card deal, so that you can pay off what you owe without being hit by hefty interest charges. Remember though that you must try and clear your balance in full before the introductory 0% period ends, or you’ll start being charged interest.

If you can’t get one, you have the right to reject the interest rate rise within 60 days and close your credit card account. The credit card company must then give you a reasonable time to pay off the money you owe.

If you’re worried that you won’t qualify for a 0% credit card deal, there are several credit checker and credit matcher tools available – and some credit card companies will also give you an indication of whether you’d be successful before you apply.

You can find the current best balance transfer credit card and personal loan rates in our guide Balance transfer credit cards and personal loans compared.

If you have a loan which you want to pay off quickly, lenders must allow you to do this, although you may be charged an early repayment penalty to do so. Lenders can charge you up to two months extra interest if you choose to pay back your loan off sooner than planned. If your loan has less than 12 months left to run, they can only charge you a penalty of up to one month’s interest if you pay it off early.

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