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A guide to UK interest rate predictions

Whether you are taking out a mortgage to help to purchase a home or whether you are simply taking out a small short-term overdraft, you always want to know the current situation on interest rates and what the future holds for them later down the line. Especially in cases of long-term loans with a variable interest rate.This article will be a guide to interest rate predictions in the UK.

Interest rates

Why are they important?
Money rates and therefore interest rates dictate the profitability of your investment. Consequently, the overall trend of interest rates can have major effects on your investments, thus, as an investor it is important to pay close attention to these trends. Major shifts in direction, up or down, should cause you to review present investments as well as point towards potential opportunities. Likewise if you pay a mortgage loan, the APR which is the rate of interest you pay annually increases, so too does you repayments. The only benefit you can gain from rising interest rates is on your savings. What factors influence the rate of interest?
Changes in interest rates are determined by many factors. The UK interest rate is very fluctuative similar to various other countries. Basically, if economic indicators such as employment and growth patterns are increasing, this means that people are likely to spend more. Out of control spending influences all types of various other things, such as the foreign exchange rate and inflation (rising costs of goods and services.) Therefore, to encourage people to save their money and reduce expenditure, interest rates increase so people are rewarded and encouraged to save, and have less pocket money to spend (due to higher loan repayments). And this is how higher interest rates help control inflation. If people have less money to spend due to higher interest rates, there is more competition among sellers of goods and services so they need to be competitive with pricing.

Predictions

Interest rate forecast
There are many online sites that have forecasted interest rates and various other economic factors such as inflation, GDP and unemployment. They illustrate inflation forecasts and market forecasts as well as interest rate forecasts in the form of graphs and statistics. The advice would be to shop around and always check the credentials of the company who have issued the predictions to ensure their accuracy. Such sites would include Thisismoney.co.uk, Marketoracle.co.uk and Financialsense.com.

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