A important event happened earlier today in that the Bank of England decided to keep the base interest rate at 0.5%.  Most people probably weren't too aware of how important a day today was for their wallets, however one thing that is pretty certain is that we are moving into a period of time when interest rates are going to increase.  In short that means that for most people with mortgages and other financial products, the cost of these will increase every month.  The major concern here is that as David Cameron recently confirmed we are looking at a period of austerity measures for at least another five years.  So what does this really mean for the man on the street.  To me it means that money is going to be scarce and unless our banks repair their balance sheets and start lending to SME's then any predicted long term recovery maybe slightly premature.

Yes its great that after seven odd years of negative chat around the economic mess we find ourselves in, there is some positive economic data to report.  Its also positive that our housing market appears to have bottomed out in terms of pricing, but lets remember when we have seen prices fall 50% from 2007, it's certainly nothing to be overly cheery about.

In any case my real concern would be that when interest rates go up next year (very likely) how will people react and cope with the additional monthly cost.  I would encourage all to budget for what's down the line and make sure that if you don't really understand what impact a rate rise will have on your family and bank account, then speak to someone who can work it out for you and cut your cloth accordingly.

Tim McCulloughComment