Current Balance = £3001.04

Great news for millionaires, interest rates increase!

The Bank of England shocked everyone today by increasing the base rate to a 5 year high of 5.25 per cent. That now means a millionaire would earn an extra £2500 per year in interest if their money was invested at the base rate bring their annual return to £52,500.

The interest rate increase has been prompted by concern that workers’ demand for higher wages is outstripping the rate of inflation, adding to inflationary pressures. So there goes my chances of a big pay rise this year!

Moneyfacts said that a typical homeowner is now paying £148 a month more on a £150,000 loan compared with July 2003 when the interest rate bottomed out a 3.5 per cent.

But don’t feel too sorry for homeowners as houseprices rose by 10.5 per cent over 2006 according to the Nationwide building society so they would have gained £15,750 on their property price. So their net wealth increased by £13,974.

Feel free to check my maths! 

£15,750 – (12 months x £148) = £13,974

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