Since March 2009 the Bank of England rate has stood at a record low of 0.5%, having been at 4.5% only five months earlier in October 2008.
Do you know how a rise in interest rates might affect you? Experian went on to the streets of Britain to ask for some thoughts.
If you are a saver, an interest rate rise is likely to be good news. As the BofE rate goes up, you can expect bank and building society rates to go up too, which could see your savings pot grow more quickly.
If you have a credit card, loan or mortgage, you may take a different view, as a rate rise could well mean an increase in your interest rate and your monthly repayments (depending on the terms and conditions). If you have a fixed rate mortgage, you won’t be affected if the rates go up during your fixed period, but when the time comes to re-mortgage, your interest rate could jump up quite significantly.
Some experts are predicting that when a rise does come, it will be in steps of 0.25% over the next few years, peaking around 3% in 2017. This might not sound like much, but the Office for Budget Responsibility (OBR) says an increase of 2.5% in the base rate would mean someone with a £150,000 repayment mortgage would have to fork out an extra £230 a month.
Having a higher credit score could actually mean you get better deals or lower interest rates. The Experian Credit Score is a guide to help you understand your credit report, and how past credit management can impact on future credit applications and for you to monitor your progress as you get your finances in order before you apply.
For more helpful information on mortgages, visit www.experian.co.uk/mortgages, with useful hints, tips and features.