People with mortgage payments will see a huge increase if interest rates rise as predicted.
Following Chancellor Kwasi Kwarteng’s controversial mini-budget last week, there have been concerns that interest rates could rise to 6% next year. This would be to combat rising inflation after the pound plunged to an all-time low against the US dollar.
Earlier this month, the Bank of England raised interest rates from 2% to to 2.25% - the highest level for 14 years and the seventh hike in a row.
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The BBC reports that, if interest rates do rise to 6%, it will mean a huge £220 rise per month for someone with a £100,000 mortgage (on average). This would jump to an extra £441 for the average person with a £200,000 mortgage - and a staggering £661 a month for someone with a £300,000 mortgage.
The figures are based on a 25-year repayment mortgage, and the increases are compared with repayment at 2%.
Finance guru Martin Lewis appeared on This morning on Wednesday to discuss the feared interest hikes. Viewers called in to the ITV show to ask for his words of wisdom but one question had him unsure.
Host Phillip Schofield read out the question, which asked what people can do about ever increasing mortgage costs as they were struggling to afford their payments. They asked: "What can I do?"
Martin held his chin, shook his head, and shrugged before he said: "I don't know." He was speechless for a moment as he chose his next words carefully.
He said: "The situation now is bad. And if those interest rates go up as discussed, and it's not certain that they will, but that is what the markets are predicting, then we are going to have millions of people sitting on a mortgage ticking time bomb."
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