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MONEY COMMENT
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According to economists, it's an odds-on bet that the Bank of England will raise its base rate by 0.25% next week, on Thursday, 5 August. The Bank's Monetary Policy Committee (MPC) will be worried about its inflation target, given the UK's continuing strong economic growth. If the MPC does increase the base rate to 4.75%, it will be the fifth rate rise since last November, when the base rate was a mere 3.5%. What's more, financial markets are predicting that the base rate will hit 5.25% by the end of the year, which suggests another two rate rises by December. If you have no debt and substantial savings, rising interest rates is good news. Alas, the UK's 11½ million mortgage borrowers are allergic to rate hikes! That's because most of these home loans are on variable rates, which means that repayments increase when, or shortly after, the base rate rises. For example, if you have a £100,000 interest-only mortgage, each 0.25% hike means forking out almost £21 extra each month. So, including August's rate rise, the 1.25% hike since last November means finding an extra £104 a month - ouch! For a similar 25-year repayment mortgage, each 0.25% increase costs roughly £16 extra a month. So, without further delay, here are five ways to prune your household expenses without pain: 1. Remortgage With around 8,000 different mortgages available in the UK, it's unlikely that you've found the best home loan for you. Cutting your interest rate by 2% would mean a saving of £167 a month on a £100,000 interest-only loan. You can learn how easy it is to remortgage in this Money Report. 2. Drive down your motoring overheads With around 28½ million cars on our roads, motoring is one of Britain's biggest outlays. If you'd like to save at least £300 a year from your driving expenses, check out the links at the end of this article. 3. Crush your communication costs As a nation, we spend tens of billions of pounds each year on home telephone, mobile and Internet charges. This article explains how to kill your home and mobile bills, and this piece explains how to get cheaper broadband Internet access. Your total saving could be £300 a year or more. 4. Slash your fuel bills Around 16 million households - around two out of three - have failed to change gas and electricity providers. With energy prices soaring, it makes sense to give switching a go - even if you've switched before. This article shows you how to go about saving £150 a year. 5. Find finer financial products It's said that UK adults are more likely to divorce than to switch banks. On the whole, we're also pretty reluctant to switch our savings accounts, credit-card debts, insurance policies, etc. This is costing us billions of pounds every year. This article explains how to get better products for less money, which should save you hundreds, even thousands, of pounds every year. Good luck with tightening your belt! More: Find better Bank accounts | Credit cards | Insurance | Savings accounts.