Martin Lewis has issued a warning after the Bank of England's announcement this afternoon (February 2). After the Monetary Policy Committee meeting voted at a majority 7-2, the bank rate has now been set at 4 percent.
Having increased by 0.5 percent from 3.5 percent in December 2022, this is now the tenth consecutive rise and takes interest rates to the highest level in 14 years since the recession in 2008. The Bank has decided to raise interest rates in a bid to control inflation as they aim to lower it to 2 percent - a target set by the government.
Following the 12pm announcement from the Bank of England, financial guru Martin Lewis gave his immediate reaction and issued a word of warning to homeowners who may be affected.
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In a tweet sent out to his 2.1 million Twitter followers, Martin has now warned how the 0.5 percent interest rate rise could affect mortgage holders' monthly repayments.
Martin tweeted: "Bank of England base rate up 0.5% pts to 4.0% - Variable/tracker rate repayment mortgages will rise c.£25/mth (£300/yr) per £100,000 of mortgage (use mortgage calc to check).
The money-saving expert explains that those who are on a variable rate mortgage, one that fluctuations in line with interest rates, could now be paying an extra £25 a month, equating to £300 a year, for every £100,000 of their mortgage.
Martin advised that homeowners on a variable rate mortgage should use a mortgage calculator to check how much their repayments could go up by for a more accurate figure.
He also confirmed that those who are on fixed rate mortgages won't be affected as he tweeted: "Existing fixes won't change. New fixed rates've already baked rises in."
Martin then gave advice on savings account amid the interest rate rise.
He wrote: "Top paying easy access savings accounts will likely rise over the next few weeks. Most big bank savings will continue to pay diddly squat, so check, ditch & switch.
"Unlikely to see top fixed savings rise much, as this news was well-flagged & thus prob factored in."
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