Martin Lewis mortgage warning to homeowners as interest rates set to rise

Interest rates are likely to increase by 0.75 percentage points from 1.75% to 2.5% when the Monetary Policy Committee (MPC) meet today.

It would be the highest interest rate that the UK has had since the financial crisis. In December 2008, the base rate was slashed from 3% to 2%.

It would also be the highest single increase to interest rates since 1989.

MoneySavingExpert Martin Lewis has warned homeowners with a mortgage that the rise could see them paying an extra £40 a month.

ITV (Image: PA)

Mr Lewis was appearing on Good Morning Britain on Wednesday when he was asked if there was hope the situation could improve for those with a mortgage.

He said: “There is very very little hope interest rates could fall.

“The current UK interest rate is 1.75%, that is likely to be going up to about 2.25% or 2.5%. It will add around £40 per month per £100,000 outstanding on your mortgage.

“We are hearing interest rates could rise even higher in the next year.”

The decision to hike interest rates is a bid to keep inflation under control. It is the best tool that the Bank of England has to steer inflation – currently at 9.9% – back to its 2% target.

But the decisions will also have major impacts on people’s finances, not least those with mortgages who will need to start paying more for their home loans.