As speculation about interest rate rises continues, new research by Lloyds TSB shows a third (32 per cent) of Brits predict interest rates will rise this summer, with almost a fifth (18 per cent) expecting to see an increase in July.
A further fifth (19 per cent) expect interest rates to rise in October 2011, with two-thirds (62 per cent) believing interest rates will definitely be higher before the start of the New Year in 2012.
Just one in twenty (five per cent) think there will be a rise in this month’s MPC announcement on Thursday with 21 per cent saying they do not know when a base rate increase will occur.
On the Up
The average increase expected in the Bank of England base rate is 0.45 per cent which equates to 0.50 per cent when rounded up with almost half (44 per cent) of people predicting a rise of 0.25 per cent and over a quarter (26 per cent) of Brits expecting at least a 0.50 per cent increase this year. Just one in twenty (5 per cent) believe we are heading for a one per cent rise, with four per cent predicting we will see an increase of more than one per cent in 2011.
Nearly two-fifths (39 per cent) are expecting two interest rate rises in 2011 alone, however, more than a quarter (28 per cent) predict just one increase this year.
A new rate for 2012
Almost a fifth (17 per cent) of Brits think the Bank of England Base Rate will have risen to 1.00 per cent by the end of 2011, with a further one in 10 (12 per cent) estimating it will reach 0.75 per cent. However, a one in ten (11 per cent) believe it will rise above 2.00 per cent.
One in ten (12 per cent) Brits think the Bank of England Base Rate will still be 0.50 per cent at the end of 2011.
Household outlook
One in 10 (11 per cent) householders believe a rise in interest rates will have a significant effect on their financial circumstances, forcing some families to re-think their budgets and cut back on every day items. A further fifth (18 per cent) think they will feel the effect meaning they need to cut back on occasional treats with 6 per cent worrying how they will cope financially.
A third (31 per cent) acknowledge they will be able to manage an interest rate rise whilst nearly three in 10 (28 per cent) Brits do not expect any change in their financial situation at all.
Greg Coughlan, head of savings at Lloyds TSB said,
“It is clear that Brits are expecting interest rate rises this year and we know savers are uncertain whether to lock their savings away for a fixed period with the continued speculation that interest rates will change.
“Many are unsure how these rises will affect their financial situation so for savers looking to take advantage of potential interest rate rises, a tracker bond may be the ideal solution to ensure their interest keeps up with Base Rate rises as and when they do occur.”
For savers wanting to make the most of rises in interest rates, Lloyds TSB has recently launched two new Tracker Bond saving accounts. Offering new and existing customers an interest rate of 3.00 per cent over a 1 year term and 3.30 per cent over a 2 year term.
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