As the Bank of England announces its final interest rate decision for the year, a survey by Standard Life, part of the Phoenix Group, uncovers widespread apprehension among consumers.
According to the Retirement Voice report, 65% of consumers experience negative feelings in anticipation of rate changes, reflecting the significant impact of interest rates on everyday financial decisions.
The survey reveals a range of emotions: 22% of respondents feel anxious, 21% are worried, and 17% experience stress before such announcements.
Additionally, a third (33%) feel uncertain, while 10% each report feelings of confusion and being overwhelmed.
This year, over half of the respondents (52%) have been anxious about the impact of rising interest rates.
These concerns are not unfounded, as 2023 has seen interest rates reach their highest level in 15 years.
The rise in rates has had varied effects; while beneficial for savers, it has led to increased costs for mortgage, loan, and credit card payments. Landlords are also likely to pass on these higher rates to renters.
Credit card debt grew by 8.7% in the year to June, and approximately 1.4 million households faced significantly higher housing costs as their fixed mortgage deals concluded.
Dean Butler, managing director for retail direct at Standard Life, commented on the findings: “Interest rates impact many areas of our lives as the cost of borrowing money rises or falls – while rising interest rates like we’ve seen this year are good news for savers, mortgage, loan and credit card payments rise and landlords are likely to pass on higher rates to renters.
“In 2023 rates have reached their highest level for 15 years while credit card debt increased by 8.7% in the year to June, and around 1.4 million households faced the reality of far higher housing costs when their fixed mortgage deals came to an end.
With higher interest rates expected to stay for some time yet, and well over a million more fixed mortgage deals expected to expire in 2024, it’s no wonder that people feel anxious or uncertain when changes are announced.
“These days people tend to get bombarded with alerts and notifications from news apps and companies as soon as something is announced, which can increase anxiety and confusion.”
He added: “It’s easier said than done, but making sure you have a buffer for rising rates when making a big financial decision like taking out a mortgage or loan can help to ease anxiety later on.
“If you can, build up a ‘rainy day’ savings pot you can dip into if times get tough as well, and be sure to look for the best rates on offer – right now, even some cash-based savings accounts are offering inflation-beating rates.”
The Bank of England will announce its decision, which appears to be all but confirmed as a hold, at midday.
