Pensioners increasingly exposed to higher costs as a result of interest rate hike

Commenting on the Bank of England’s decision to increase interest rates from 3.5% to 4%, Clare Moffat, pension expert at Royal London, says:

"With inflation remaining stubbornly elevated, today’s additional base rate rise doesn’t come as a surprise, but it will be unwelcome news for borrowers of all ages. An increase in interest rates heaps further pain on variable rate mortgage holders, those coming off a fixed rate deal who will see a big jump in costs, and many renters will also see increases passed on.

"Traditionally an interest rate hike would be welcomed by retirees keen to earn more interest on their savings. However, increasingly pensioners in the UK have to take into account the cost of housing from their retirement income, something along with high inflation that diminishes the value of their pension income.

"The impact of rising interest rates on personal finances is an issue that’s keeping retirees awake at night, with a fifth of retirees (19%) admitting they’re worried about housing costs according to Royal London’s ‘cost of living’ research*."