Money Saving Expert founder Martin Lewis has issued important advice on some financial interests for the new year.
As we head into 2023, the financial guru warned of a 'brutal' year as the country continues to tackle the energy crisis and the growing inflation rate.
As Lancs Live reports, Martin was honoured at the National Television Awards last year for his work in offering vital financial advice and warnings to people who have been hit hardest by these turbulent economic times.
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With this, he and the team behind moneysavingexpert.co.uk (MSE), have issued important advice on mortgages, energy bills and what support is available this year.
This comes as millions of households on low incomes will receive fresh cost-of-living support from this spring as the Department for Work and Pensions (DWP) announced further details on the payments schedule.
The new £900 cash support for over eight million eligible means-tested benefits claimants, including people on Universal Credit, Pension Credit and tax credits, starts in the spring and will go directly to bank accounts in three payments, the DWP said.
Fixed rate mortgages
The team at MSE grilled mortgage experts and financial market analysts on their expectations for 2023. MSE found that the consensus is that rates on fixed mortgages are likely to fall next year. As a result, tracker mortgages could be a good solution for borrowers in the medium-term waiting to see where the market is headed in 2023.
Interest rates on fixed rate mortgages have increased steeply over the last year. And while the average rates on a two-year fix recently dipped back under six per cent, this remains significantly higher than average rates of 2.34 per cent 12 months ago.
According to Ray Boulger, while fixed-rate deals made up 95 per cent of new mortgages until recently, this figure is expected to drop to around 75 per cent in 2023.
Energy bills
Energy bills are set to rise once again in April as Chancellor Jeremy Hunt confirmed that the average household bill would rise to £3,000 as of next April - up from the existing cap of £2,500. This comes after energy analysts at Cornwall Insight predicted the price cap would hit £3,739, so the confirmed price is lower.
It has also been confirmed that the Energy Price Cap Guarantee will be extended further than April 2023, announcing that an average of £500 in support will be available for each and every UK household.
Speaking on the Martin Lewis Money Show, he said: "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 upon that."
With that, Martin went on to warn that without the £400 energy discount next winter, households will likely be paying on average £3,000 a year on their bill.
He added: "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 per cent - 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."
Government grants
Throughout 2022, Martin urged people to check if they are eligible for any government grants, highlighting that many who are entitled to support aren't claiming it.
Households earning less than £40,000 a year have been told it is well worth spending around 10 minutes checking if they're entitled to any additional financial help.
The financial expert said millions of households could meet the eligibility requirements to get Universal Credit without realising it, and a simple benefits calculator could help people to find out.
He said: "There are up to seven million of you who are eligible and who are missing out. I am not, repeat, 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."
Benefits calculators, such as this one highlighted by the Department for Work and Pensions, allow households to input their income and other details to check their eligibility for benefits. The online assessment takes around 10 minutes to complete.
On top of that, households should have also received discounts to their electricity bills.
He added: "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," he said. "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 30 November, 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."
He said: "The energy price guarantee in 2023 may become volumetric. What that means is you'll get cheaper rates up to a certain amount of usage and if you use more, then the rate will get higher to encourage people to use less, more of a subsidy on a lower rate - it's a consultation.
"Then from April 2024, I suspect they're hoping we go back to that competitive switching market, they want to look at a social tariff, something I've campaigned on for years. So I'm pleased to see that if we do get back into that situation, that means those people who never switch and can't switch and don't understand it, you know - someone with onset dementia who's never going to engage in the competitive market - would automatically be put on a cheaper tariff and will not have to switch anymore."
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