Financial guru Martin Lewis has issued a warning to everyone with a mortgage and savings account following a hike in interest rates.
For the eighth time in a row on Thursday, the Bank of England increased the base rate to three per cent from 2.5 per cent - it's highest for 14 years. This could add around £3,000 per year to mortgage bills for those households that are set to renew existing fixed rate, the Bank also adds.
The money saving expert quickly took to Twitter to offer his expert advice and warned variable and tracker rate mortgage payers they can expect to see their payments increase by £40 per month/ £480 per year for every £100,000 of their mortgage. With that, he also added that those with a savings account with continue to pay "diddly squat, so ditch and switch", writes the Daily Record.
READ NEXT- New Edinburgh property hotspot named as house prices rise by 9.5% in one area
Posting on Twitter, Martin wrote: “Bank of England has increased base rates by 0.75 per cent points to three per cent. Variable/tracker rate mortgages will rise by roughly £40/mth (£480/yr) per £100,000 of mortgage.
“Existing fixes won't change, but when they end new deals will be far costlier.”
While looking at how the changes will impact those with savings accounts, Martin added: “Top paying easy access savings accounts will likely rise but it can take a month. Most big bank savings will continue to pay diddly squat, so ditch and switch.
“The jury's out on if top fixed savings will rise much or if this rise has already been baked in. I’ll keep you updated.”
In a press conference following the decision, Governor of the Bank of England, Andrew Bailey, said: “We do understand the difficulties of the situation we’re in and the difficulties mortgage-holders face.
“If we don’t take action to get inflation down, things will get worse.”
He added that there was “no easy outcome to this”.
“What we have announced today should not lead to higher mortgage rates, I think there is a downside to mortgage rates in that sense."
Commenting on the increase, Citizens Advice Scotland’s Financial Health spokesperson Myles Fitt, said: “The hits just keep on coming for people’s finances and household budgets. Today’s announcement will lead to higher mortgage payments for many along with more expensive debt repayments.
“And this is on top of increases in energy bills, petrol costs, food and other living costs while wages stagnate, so it is little wonder CABS are seeing increasing numbers of people who are just unable to cope.
“Our online advice page on mortgages had seen an increase of nearly 300% from the same period last year. Today’s announcement is going to make this problem a whole lot worse for homeowners across the country - the cost of living crisis isn’t so much squeezing people’s financial wellbeing, it’s crushing it.”
He added: “We call on the Chancellor to recognise in his upcoming Budget that more support is urgently needed for households in or at risk of financial distress.”
Paul Hilton, CEO of Edinburgh estate agents ESPC, said: "This rise was not unexpected and has already been priced into many mortgage products. With the BOE confirming any future rate rises may not be as high as ‘currently envisaged by the financial markets’, we may see some reductions in new fixed-rate products.
“Scotland’s property market is historically resilient, and we anticipate that demand for quality local housing stock will remain steady. Despite the recent changes in the financial market, moving home remains a good opportunity and the increasing focus on affordability highlights the importance of high quality, expert advice for buyers.
"This is where your solicitor estate agent is key, as they are duty-bound by the Law Society of Scotland to do the best by their client and this ensures that affordability and individual circumstances are key when making an offer and buying a new home.”
Anyone who needs help with their finances can get free, confidential advice from their local CAB, or from the income maximisation self-help tool www.moneymap.scot.
READ NEXT-
Mum slams 'nightmare' Gen Z colleagues for attitude towards work
Full list of Edinburgh ScotRail strikes in November and December up until Christmas
Edinburgh St James Quarter to host style event with beauty, fashion and Christmas gifts
All the energy crisis measures to expect as blackouts included in worst case scenario plans
King Charles to 'break Queen's tradition' on first Remembrance Sunday
