The bond market sell-off has sparked fresh fears of higher borrowing costs for UK households. We look at what the turmoil in financial markets could mean for your mortgage, pension and savings.Cost and choice of home loans
The most important thing for savings rates is the Bank of England base rate and where the markets expect it to be in the future.The money markets expect the Bank of England to leave interest rates on hold at 3.75% at its next policy decision on 17 September. However, the City expects one rate rise before the end of the year, and two more hikes in 2027.At the moment, the top-paying easy-access savings accounts pay about 4.5% interest or thereabouts.Sarah Coles, head of personal finance at the investment platform AJ Bell, says the current market gyrations tend to be good news for savings deals as banks usually react by increasing their interest rates. “This particularly affects fixed rate accounts, so we tend to see them move first and fastest.”“The market is already impressively competitive at the moment, so the reaction may not be particularly dramatic. However, the movements in gilt yields have actually pushed the best five-year fixed [savings] rate over 5%, and we are likely to keep seeing rates nudge up from here.”
