MARTIN Lewis is urging savers to switch bank accounts after the Bank of England hiked interest rates.
The founder of MoneySavingExpert.com warned that banks will be less likely to pass the new interest rates on to savers.
Egter, mortgage holders are likely to be hit hard by the new rates.
Interest rates will rise from 1.75% aan 2.25% and the move will make the cost of borrowing more expensive.
Martin Lewis took the news to Twitter and explained how the rise in interest rates will affect individuals in practice.
His post read: “Bank van Engeland‘s just increased UK base rates by 0.5% points from 1.75% aan 2.25%. Highest since 2008.
“FIXED MORTGAGE no change till it ends, then new fix’ll be much costlier.”
Martin explained that those on a fixed rate mortgages are safe for now – but face a huge jump in borrowing costs when they come to remortgage.
Around 2.2million borrowers are due to come to the end of a deal that they fixed when the base rate was at a historic low of 0.1%.
Die meeste gelees in geld
On a fixed deal you lock in a rate for a certain period of time which keeps payments the same.
Martin then said: “VARIABLE MORTGAGE c£25/mth rise per £100k mortgage.”
Martin said that the 2million on standard variable rates will likely to see their rate increase soon, as banks often pass on a rise within days or weeks.
Egter, the exact rise will depend on how much you have borrowed and the rate you are on.
The MoneySavingExpert also said: “SAVINGS many won’t pass rise on, be prepared to switch.
“With savings, the key is the top rate and top fixes will go up. So wait a day or two for new rate to be factored in, then check your savings, and if it is crap ditch and switch.”
This means savings rates are more likely to edge up slowly rather than change immediately.
Anyone currently getting a low rate on easy access savings could find it’s worth looking around for a better rate after any rate rise and moving their money.
Ditch the ISA
With today’s personal savings allowance a saver would only be taxed on their savings if they had £65,000 or more in the bank – so it’s unwise to open a cash ISA right now.
You could bag up to £32,000 for free from the government if you max out this savings account over the long-term.
A Lisa is savings account for anyone aged 18-49 – you can put in up to £4,000 a year until you’re 50, and the government adds an additional 25% bonus on top.
But you can only use the money you save to either buy your first home or at retirement, or you’ll forfeit the bonus.
How can I bag the best savings rates?
Use comparison sites. Rachel Springall, finance expert at Moneyfacts.co.uk voorheen aan The Sun gesê: “Comparison sites are a quick way to compare the top rates.
“Savers can even search by how much they are looking to put aside and how long they are prepared to lock it away.”
With your current rates in mind, don’t waste time looking at individual banking sites to compare rates – it’ll take you eternity.
These sites let you tailor your searches to an account type that suits you.