Martin Lewis has issued a warning for homeowners following the Bank of England's (BoE) decision to raise the base rate to 4.5 per cent.
The money-saving expert explained how monthly mortgage payments will rise, leaving many homeowners worse off. The BoE announced today the base interest rate will rise following a vote by members of the Bank's Monetary Policy Committee.
It means the interest rate is now at its highest level since the 2008 financial crash, with borrowers facing higher costs in an attempt to drive down inflation. However, depending on which mortgage plan a borrower is currently on, they may not yet feel the brunt of the rate increases.
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Writing on Twitter, Martin said: "Bank of England base rate up 0.25% pts to 4.5% (12th consecutive rise, highest level since 2008). Variable/tracker rate repayment mortgages will rise c.£12/mth (£150/yr) per £100,000 of mortgage (use mortgage calc to check)."
He highlighted that those on fixed rates will not see their monthly payments change. He added: "Existing fixes won't change. New cheap fixed rates've already baked rises in and in fact are lower than cheap tracker rates likely indicating markets think future rates will be lower.
"Top paying easy access savings accounts will likely rise a tiny bit over the next few weeks (though competition between providers is the biggest driver of change right now). Most big bank savings will continue to pay diddly squat, so check, ditch & switch Unlikely to see top fixed savings rise much, as like with mortgages, this news was well-flagged & thus prob factored in."
Those on fixed mortgage rates will not see an increase in their payments until they renew their plan. If you're concerned about how your mortgage will change, you can use a mortgage calculator here.
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