SONIA (interest rate)

Sonia is an interest rate that is based on the short-term borrowing costs of the UK government. It stands for 'Sterling Overnight Index Average'. Banks use Sonia when they lend money to each other overnight, and it is also used as a benchmark to set other interest rates, like the ones you pay on your mortgage or loan. When the Sonia rate goes up, it usually costs more to borrow money, which makes it more expensive to buy things like houses and cars. When the Sonia rate goes down, it usually becomes cheaper to borrow money, making it easier for people to buy big things.