Money expert Martin Lewis has warned homeowners after the Bank of England's latest announcement. The Bank of England announced on Thursday, December 15 they would increase interest rates by 0.5 per cent to 3.5 per cent - the ninth consecutive rise in 2022.
The BoE recently carried out the biggest interest rate increase since 1989, with rates raised by 0.75 percent to 3 percent on November 3, in a bid to slow inflation. The base rate of 3.5 percent is now the highest rate that the UK has seen since the recession in 2008, as reported by MEN.
The Monetary Policy Committee voted by a majority of 6-3 to increase the Bank rate to 3.5%, once again aiming to soften inflation. However, this measure will have a negative impact on many homeowners with mortgages.
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Just after the news broke at 12noon on Thursday, December 15, popular finance guru Martin Lewis issued a strong warning to mortgage holders via Twitter. Martin reminded his 2 million followers the 0.5 per cent increase could raise monthly mortgage repayments for those with variable rates mortgage deals and other forms of borrowing.
Martin said: "Bank of England base rate up 0.5% pts to 3.5% - Variable/tracker rate repayment mortgages will rise c.£25/mth (£300/yr) per £100,000 of mortgage (use mortgage calc to check)." This means that anyone who has a variable or tracker rate mortgage, one that adjusts in line with interest rates, could be paying a minimum of an extra £25 a month, or £300 a year, for every £100,000 of their mortgage.
He added those with fixed rate mortgages most likely would not be affected. He tweeted: "Existing fixes won't change. New fixed rates've already likely baked much of this rise in."
For those trying to save, Martin said to look around at other savings accounts amid the interest rate rise. He wrote: "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 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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