Comment? Increased Interest rates can impact your insurance policies too 

BOE RATE HIKE COULD MAKE SOME INSURANCE POLICIES MORE EXPENSIVE 

The Bank of England’s Monetary Policy Committee has raised its base rate to 0.5%, the first time the central bank has implemented back-to-back interest rate hikes since 2004. 

While a higher base rate may be welcomed by savers, because it could help push their savings rates a little higher, it’s likely to be less welcome news for mortgage holders and people with personal loans, because the interest rate on many of those debts could rise a little too. 

However, Quotezone.co.uk, one of the UK’s leading insurance comparison platforms, is pointing out that the interest rate hike could make the cost of car insurance, motorbike insurance and home insurance a little more expensive for some policyholders as well.  

Greg Wilson, Founder of Quotezone.co.uk, explains: “When policyholders choose to pay for their insurance policy on a monthly basis they will usually pay more for the privilege, with the extra amount coming from interest that is charged against the lump sum the policyholder is being ‘advanced’. Since an interest rate hike by the Bank of England could result in some of these interest rates for monthly insurance payment plans rising as well, the net result could be higher premiums for many policyholders that choose to pay monthly. 

“Of course, a 0.25% interest rate rise isn’t likely to break the bank for most policyholders, but it’s possible the Bank of England might have further interest rate hikes on the cards for later in the year. If policyholders can afford to pay for their policies annually instead of monthly it could save them quite a bit in the long run.”