70% of Brits can’t state what the currently Bank Rate is, according to new research from MoneySuperMarket.
Just one in 100 Brits understands how a hike of the current 0.25% rate, the first in a decade, would affect their mortgage repayments.
23% of respondents said they didn’t know how it would affect their pay packet, and 41% believe their pay would not be affected at all.
Furthermore, when asked what the term ‘interest rate’ meant, 55% admit to not knowing at all, while 8% believe it is the value of how much interest their bank has in them.
81% of 18-24 year olds not understanding the term ‘interest rate’, compared to 57% of 45-54 year olds.
40% of men were able to identify the current base rate compared to 25% of women. 32% of women admitted their partner is more knowledgeable on the topic, compared to just 7% of men.
When asked who in their household was the most knowledgeable about rates as a whole, 43% claimed it was themselves – yet the majority of people who answered this way (63%) actually got the current rate wrong, or didn’t know it.
There was also a clear gap among different areas of the UK. People in the South West were the most knowledgeable, with 45% of respondents correctly stating the base rate, followed by 35% in the South East and Northern Ireland. However, only 14% of those in Wales were able to provide the right figure, the lowest of all the regions surveyed.
Sally Francis, spokesperson at MoneySuperMarket, said: “There’s been very little movement in the Bank of England base rate since 2009 so it’s understandable that most Brits aren’t sure how a shift could affect their finances. The anticipated rise of 0.25% might seem small but it could pave the way for a string of increases that could impact some of the biggest bills. We’re encouraging people to take control of their finances today and learn how any future changes could affect their money.
“A rise in the base rate, coupled with the end of the Funding for Lending scheme – a Bank of England incentive for financial institutions to borrow cheaply from it – early next year is good news for savers, but if you’re on a tracker mortgage your monthly instalments will rise as soon as any base rate increase is announced. If you’re on a capped or discount mortgage, you could also see increases so acting immediately could save you thousands in the long run, especially if base rate continues to rise. Switching to a fixed rate mortgage ensures that your monthly repayments stay the same for the duration of your fixed period, providing certainty and stability in your finances.”