Bank of England has raised interest rate after a long period of one decade, as last increase was done on July 2007. Now many high street banks and lenders are in process of increasing their interest rates.
Lloyds Banking Group, TSB, Royal Bank of Scotland are the few lenders who have announced in rate hike with in hours of Bank of England's upward revision interest rates from 0.25% to 0.50% on 2nd November 2017.
Increase in interest rates by the Bank of England provides short of relief to many UK lenders. Because continuous low interest rates have flush-out banks’ margins by finishing the difference between what they are paying on deposit to what they are charging on loan. The loan defaults are additional losses in their business.
The other side of coin, borrowers have to pay more and this will impact their monthly budget. Although increase is very small but this will have psychological impact on borrower's sentiments after a decade. For small and short term borrowers will not feel big impact of it but for long term borrowers and home loan cases this will hit hard.
If your loan on variable interest rates means floating type then change for fixed one.
First check with your lender for best rate otherwise compare with other lending source and choose the best, you can also take help of broker.
If your loan is on fixed rate then stick with it but keep on watch on base rates as your fix rate will also go high with increase in base rate.
If you are on short term fix rate deal say for six month then search other options well in advance.
Representative Example: Borrow £250 for 90 days. Total amount repayable is £411.63 in 3 monthly instalments of £137.21. Fixed interest rate of 292% per year. 1272% APR Representative.