A third of Brits predict a summer rate rise
As speculation about interest rate rises continues, new research by Lloyds TSB shows a third (32%) of Brits predict interest rates will rise this summer, with almost a fifth (18%) expecting to see an increase in July.
A further fifth (19%) expect interest rates to rise in October 2011, with two-thirds (62%) believing interest rates will definitely be higher before the start of the New Year in 2012.
Just one in twenty (5%) think there will be a rise in this month's MPC announcement on Thursday with 21% saying they do not know when a base rate increase will occur.
On the Up
The average increase expected in the Bank of England base rate is 0.45% which equates to 0.50% when rounded up with almost half (44%) of people predicting a rise of 0.25% and over a quarter (26%) of Brits expecting at least a 0.50% increase this year. Just one in twenty (5%) believe we are heading for a one per cent rise, with 4% predicting we will see an increase of more than 1% in 2011.
Nearly two-fifths (39%) are expecting two interest rate rises in 2011 alone, however, more than a quarter (28%) predict just one increase this year.
A new rate for 2012
Almost a fifth (17%) of Brits think the Bank of England Base Rate will have risen to 1.00% by the end of 2011, with a further one in ten (12%) estimating it will reach 0.75%. However, a one in ten (11%) believe it will rise above 2.00%.
One in ten (12%) Brits think the Bank of England Base Rate will still be 0.50% at the end of 2011.
Household outlook
One in 10 (11%) householders believe a rise in interest rates will have a significant effect on their financial circumstances, forcing some families to re-think their budgets and cut back on every day items. A further fifth (18%) think they will feel the effect meaning they need to cut back on occasional treats with 6% worrying how they will cope financially.
A third (31%) acknowledge they will be able to manage an interest rate rise whilst nearly three in 10 (28%) Brits do not expect any change in their financial situation at all.
Greg Coughlan, Head of Savings at Lloyds TSB said, "It is clear that Brits are expecting interest rate rises this year and we know savers are uncertain whether to lock their savings away for a fixed period with the continued speculation that interest rates will change.
"Many are unsure how these rises will affect their financial situation so for savers looking to take advantage of potential interest rate rises, a tracker bond may be the ideal solution to ensure their interest keeps up with Base Rate rises as and when they do occur."
For savers wanting to make the most of rises in interest rates, Lloyds TSB has recently launched two new Tracker Bond saving accounts. Offering new and existing customers an interest rate of 3.00% over a 1 year term and 3.30% over a 2 year term.
Tracker Bond Key Features
3.00% AER/Gross for 1 Year (tracks 2.50% over the Bank of England base rate until maturity)
3.30% AER/Gross for 2 Years (tracks 2.80% over the Bank of England base rate until maturity)
Minimum balance of £2,000
Maximum balance £1,000,000
Available to both new and existing Lloyds TSB customers
No withdrawals allowed during the term
Open in branch or by telephone
For more information, visit lloydstsb.com/savings.