What do you think is going to happen to interest rates?

The Bank of Englands Base Rate which sets the underlying tone for interest rates currently stands at 0.5%, an all time low. It won't get any lower so, as the song says, the only way is up! The question is when will it rise? Some commentators were forcasting later this year but now many of them are pushing the expectations back 6 to 9 months.

The other problem for you is that interest rate charged to consumers used to be very closely tied to bank rate - but no longer. The interest rates charged by banks when lending to other banks has a much greater influence these days on rates offered to consumerts and that rate is called LIBOR. It's a higher rate than Base Rate.

We have also seen a trend for the margin between LIBOR and consumer rates to widen as banks have tried to improve their profitability. In my view, any changes in coming months will be largely down to banks adjusting this margin up or down as it suits them. Big reductions in their margin cannot be expected until banks are again competing agressively for your business - and unfortunately, that seems a good way off.

Broker Boy