After UK rate hike, PM May expects higher returns for savers - spokesman


Mr Carney also said he "expected" banks to change savers' rates accordingly.

For every £20 of extra interest...

The Bank increased rates from 0.25 per cent to 0.5 per cent, reversing last year's emergency reduction after the European Union referendum.

Santander has said savings products linked to the base rate will move in line with the increase.

Thousands of homeowners here in Liverpool, those on standard variable rate or a tracker rate, will now face higher mortgage interest payments but John-Paul Dennis, partner at Kirwans law firm, doesn't expect to see a major impact on the Liverpool property market at large.

Britain's first interest rate hike in more than a decade will have an nearly immediate effect on mortgage rates, but with few implications for the prime housing market, experts say.

"The 0.25% lift in the base rate will likely be passed on to borrowers on variable-rate mortgage deals nearly immediately-with a material effect", said Simon Gammon, managing partner at Knight Frank Finance.

Dr Farquhar, senior lecturer in the Department of Finance, Accounting, Systems and Economics, said: "If this is a sign that interest rates are going in an upward direction then it could have potentially very serious consequences, because household debt is still going up. Even a small increase could potentially be quite significant".

Former pensions minister Sir Steve Webb, who is now director of policy at Royal London, said: "After a decade of low and falling interest rates, today's rise provides a modest boost for pensions".

Recent figures showed the average amount of debt per person was now £8,000 - not including mortgages, he said, and around a quarter of people said they were struggling.

He predicts a series of small, 0.25 per cent, increases over time, particularly while the Bank of England and the rest of the financial economy waits for some kind of certainty over the impact of Brexit.

Bank governor Mark Carney said: "With unemployment at a 42-year low, inflation running above target and growth just above its new, lower speed limit, the time has come to ease our foot off the accelerator".

"The rate's rise will be gradual and modest and, in my opinion, will not affect the prime central market, which is a market unto itself", Ms. Fatemi said.

"We'll watch it closely".