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Good news for first-time buyers?

Updated 22 December 2022

2min read

Nick Green
Financial Journalist

The governor of the Bank of England, Mark Carney, has heavily hinted interest rates could rise this year. What could this mean for you? And why might this be good for first-time buyers?


Last week, the Bank of England’s governor warned interest rates could start to rise slowly this year. What are the implications of an interest rate rise for you?

If you’re looking to buy your first home

If you’ve been waiting to hop on the housing ladder, this could be great news for you, as it could signal a slowing down to our red-hot housing market. Minutes before Mark Carney’s speech and hints about interest rates, the chancellor, George Osbourne announced new powers for the Bank to restrict mortgage lending. This may sound like bad news if you’re thinking of applying for a mortgage, but actually it just means that people won’t be able to borrow unaffordable sums anymore (which they could often not afford to pay back) which in turn pushed up house prices for everyone. Plus, if the market does start to slow down it could potentially mean more people selling up leading to more house availability.

If you’re a saver

For the past five years, savers have been getting a bit of a bum deal. Interest rates have been historically low, which is tough when you’re trying to save for your future or for a deposit on a house. The 0.5 per cent rate, which was first announced more than five years ago, brought the lowest level in more than 300 years. This meant that savers currently aren’t getting the returns on their cash, while borrowers are basking in the low rates. But if these rates start to rise this year, you’ll start seeing better returns on your savings. It will be small initially and gradual, but you should start to see the difference.

If you’re a homeowner

If interest rates go up, so could the amount of money you have to repay on your mortgage. If you have a fixed-term mortgage, this shouldn’t affect to you for now, but those with a variable rate could see their repayments go up. Could you afford your repayments if interest rates rose by say, 1 per cent? If you’re worried about how you’ll pay your mortgage if the interest rates do rise, try speaking to a whole of market financial adviser.

If you’re coming up to retirement

Annuities have been getting a bad press lately, but buying an annuity can still be the best option for some. And as annuity rates are linked with interest rates, it’s worth not dismissing them. Download our pre-retirement checklist to help you ask the right questions and make the right decisions when pension planning. A whole of market adviser specialising in pensions can help you with your retirement planning.

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About the author
Nick Green is a financial journalist writing for Unbiased.co.uk, the site that has helped over 10 million people find financial, business and legal advice. Nick has been writing professionally on money and business topics for over 15 years, and has previously written for leading accountancy firms PKF and BDO.