Many UK households are heading into 2023 uncertain about what the coming year holds for their finances after a turbulent 2022.
MoneySavingExpert Martin Lewis has become one of the most trusted sources of advice for people struggling to keep up with the rising cost of living, and has warned that difficulties still lie ahead for many. The financial expert has issued advice in recent months about what households can expect on the likes of their energy bills and mortgages as the economy remains in turmoil.
Martin has also urged households to check whether they are eligible for extra support this year to help them through the crisis, with a range of benefits and Government grants available. Here's what the MSE founder has said about what 2023 has in store for households in the UK, as reported by LancsLive.
READ MORE: DWP announces key cost of living payment dates starting in spring 2023
Energy bills
After Chancellor Jeremy Hunt confirmed that the typical annual energy bill would be capped at £3,000 from April, a £500 rise of the current price cap introduced in October, many households have been left wondering what this means for their bills in 2023. Speaking about the situation on his Money Show, Martin explained: "Currently, the energy price guarantee is set on £2,500 a year for somebody who has typical usage - use more you pay more, use less you pay less.
"From April, it will be going up to £3,000 on typical energy usage. But what's important to understand is that, staggeringly, is a subsidised price. That isn't based on wholesale prices, that's subsidised.
"Now look, if we'd stayed on the old price cap system, we would have been on way more now on the old price cap system than the energy price guarantee. The difference is what the Government contributes to everybody's energy bills, the poorest and the richest in society - I'll leave you to make your own minds up on that."
Martin warned that without the £400 energy discount next winter, households will likely be paying on average £3,000 a year on their bill. He said: "You've all got something to help your energy bills this winter; £67 a month, over six months, which is £400.
"So let's get rid of that and let's look at the £400 that you've got this winter. That effectively reduces your energy bills and everyone's energy bills, but that is not being paid next winter. So for somebody on typical use, pro-rata, they're paying the equivalent of £2,100 a year, this winter.
"Next winter, it will be £3,000. Energy prices nearly doubled from last winter to this winter, and they will be going up again by 43% - on average - next winter. And if you use less, losing that £400 has a bigger effect, and your percentage rise, I'm afraid to say, will actually be more."
Universal Credit
Martin recently called upon households earning less than £40,000 to see if they could get extra support in the form of Universal Credit, saying that millions could meet the eligibility requirements without even realising it. Finding out whether you can get Universal Credit can be as simple as using an online benefits calculator, such as the one highlighted by DWP.
The MoneySavingExpert founder said: "There are up to seven million of you who are eligible and who are missing out. I am not, repeat, not saying you will get it. I am saying it's definitely worth 10 minutes of your time to go onto an online benefits calculator- there are a good few of them out there - and it should take about 10 minutes to put all of your details in to see if you are due."
Government grants
Martin has urged households to make sure they check whether they are entitled to any financial support to help them with living costs in 2023, with a range of payments available to people on certain benefits. He said: "This winter we're in the middle of getting those £66 or £67 a month - you should be getting them if you pay for electricity. However, that won't happen next winter.
"For those on benefits and tax credits, the £650 has mostly been paid - everyone who's eligible should have got it by November 30, the vast majority have got that now. Next winter, that's going up to £900 - so it covers some of the gap of the lost £400 for those on benefits but not all of it.
"For those with disabilities, you should have had £150 and you get the same amount next winter. For state pensioners, the £300 that goes on top of the Winter Fuel Payment (which is £100 to £300), that starts being paid from 23 November and you should have got it by the middle of January 2023 - that's also going to be £300 next year."
DWP recently confirmed key payment dates for upcoming cost of living payments, which will give a £900 cash boost to over eight million benefit claimants over the course of 2023 and 2024. The first instalment of £301 is due in the spring, with a second payment of £300 due in the autumn and the final £300 due in spring next year.
Mortgages
Interest rates on fixed mortgages have shot up over the past 12 months, leaving many homeowners and budding first-time buyers concerned about whether they will be able to afford payments if the trend continues. MoneySavingExpert spoke to mortgage experts and financial market analysts to get their predictions for 2023.
According to the MSE website, variable rate mortgages, like trackers and discount deals, are growing in demand as rates on these are far better than those on fixes. According to mortgage expert Ray Boulger, while fixed-rate deals made up 95% of new mortgages until recently, this figure is expected to drop to around 75% in 2023.
Martin has previously warned that a "huge payment shock" is coming for mortgage holders in the spring as they are likely to be moved onto "far, far higher rates", and attended a Mortgage Summit in Downing Street last month to advise lenders on what they can do to help customers. Describing it as a "decent meet on putting best practice flexibility and forbearance measures in place for spring", Martin said that lenders and the FCA "seemed open to suggestions".
The FCA also issued advice following the summit on the support available for mortgage holders amid rising interest rates. They explained that there are options available from lenders for anyone who may be struggling to afford their mortgage repayments, including extending the term of the mortgage - although this will increase the amount you have to pay back overall - or moving to an interest-only mortgage, though if you do this temporarily your monthly payments will be higher when you switch back to repaying your mortgage.
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