On the Bank of England’s announcement that the base rate will increase to 0.5%, Martin Lewis, founder of MoneySavingExpert.com said:
“Low interest rates have been a plague for many with savings, especially those who retired and expected to live off the interest. So rate rises are generally good news for them – indeed we’ve already seen rates crawl up in expectation. The top easy access deal is now 1.3%, compared to just 1% a few months ago. This means I doubt we’ll see the top best-buys rise by the full 0.25% over the next few weeks.With a little bit of crystal ball gazing I’d say we’ll see them max out at 1.4% to 1.5%.
“Yet many people have money in savings accounts already paying pitiful, spitworth rates like0.1%, and they are unlikely to rise. Those in a middling account paying about 0.5% may see an increase over the next few weeks. But if you're earning less than 1%, it's a crap account anyway so you should ditch and switch.”
“Millions of people on variable mortgages will see a direct increase in cost of roughly £200 a year per £100,000 of outstanding mortgage. And most lenders will pass on the full 0.25% if not more. Lenders change their standard variable rates not only based on interest rate moves, but for their own competitive advantage.Do not be surprised if some lenders use this move as an opportunity to sneak rates up further maybe 0.3%.
“The bigger picture though is this is likely to be the beginning of the end of uber-cheap mortgages. New fixes are already a tad costlier as the market's anticipated rate rises; yet for now, deals are still incredibly cheap. And it’s important to understand that most lenders set aside a tranche – say £30m worth – that they're willing to loan at the current rate. Those deals stay till that tranche is gone, so if rates do rise, there’s still a window of opportunity for the next couple of weeks to get current cheap deals.Everyone should check to see if they’re overpaying.”
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About Martin Lewis: Martin Lewis OBE, Money Saving Expert, is the journalist and consumer campaigner who created MoneySavingExpert.com and is now the site’s Executive Chair. Martin also founded and chairs the Money and Mental Health Policy Institute charity.
He’s the UK’s most-googled man, Citizens Advice’s Consumer Champion of the Year, and has spearheaded major financial justice campaigns including bank charges reclaiming (over seven million template letters downloaded), PPI reclaiming (over six million) and a successful large-scale campaign to get financial education in schools. He has his own prime-time ITV programme, The Martin Lewis Money Show, as well as a range of other regular media slots. He was appointed OBE in the Queen’s Birthday Honours in June 2014.
About MoneySavingExpert.com: MoneySavingExpert.com is dedicated to cutting consumers’ bills and fighting their corner. The free-to-use consumer finance help resource aims to show people how to save money on anything and everything, and campaigns for financial justice. It was set up in 2003 for just £100, and its free-to-use, ethical stance quickly made it the UK’s biggest independent money website, according to internet ranking site Alexa.com, and the number one ‘Business and Finance – Business Information’ site, according to Hitwise. It has more than 12 million people opted-in to receive the weekly MSE’s Money Tips email, and more than 16 million unique monthly site users who visit more than 28 million times a month. In September 2012, it joined the MoneySupermarket.com Group PLC.