Interest rates hold firm for now – what it means for your savings, mortgages, and annuities

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Two years on from the UK's first rate rise, we look at what's next for interest rates and what it will mean for the economy, annuities, your savings and mortgages.

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Published on 14 December 2023

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

Two years ago, the era of cheap money ended as the Bank of England (BoE) raised the base interest rate from 0.1% to 0.25%. The first in a painful series of hikes to try and drive down demand, and prices. The BoE announced today that the current rate of 5.25% would hold for now.

Inflation has been a hard nut to crack. It's been fuelled by the pent-up frenzy for goods and services after the pandemic, squeezed supply chains, and the shock of the Ukraine war. The BoE's tools for cutting down rampant inflation are blunt, so the financial pain has been unevenly inflicted.

Mortgage holders having to renew deals have cut spending. Landlords have felt the pressure, passing on costs to tenants already struggling with the rising costs of essentials.

Businesses who were used to low-cost loans have struggled