Interest rate risk management

How it works

Interest rate volatility can affect your bottom line profit in two ways.

1. If interest rates rise and you borrow money on a variable rate loan, your cost of funds will increase.
2. If interest rates fall, and you hold cash investments, your return on these funds will reduce.

Interest rate risk management

There are a range of approaches to interest rate risk management which could include fixing your rate with fixed rate loan or interest rate swap. Alternatively, more flexible approaches can protect you against adverse movements in rates but allow you to benefit when rates move favourably.

If your borrowings are in excess of £250,000 (and this includes borrowings with other financial organisations), this could protect you against increased interest costs if UK interest rates rise.

Talk to us. We will develop a four point plan which will help you to:

• understand your risks
• understand the options available to you
• develop a an individual strategy
• implement your strategy.

If your cash or your cash investments are in excess of £50,000, we can also help you to maximise your returns by investing in money market accounts. These interest rates are linked to the London Money Markets and can be a useful alternative to branch based savings accounts.