Martin Lewis issues urgent mortgage warning to Brits with debt on their homes - 'Beware the anomaly'
Published: 04/02/2023- 10:44
Martin Lewis has issued an interest rate warning for consumers as the money expert points out an anomaly.
The financial expert has urged homeowners not to assume interest rates will return to a low as they were – because it may never happen.
He warned that interest rates, which have been typically higher over the last two centuries compared to the last 15 years, may never return to around 0.5 per cent.
Lewis says the last 15 years are likely to be the anomaly.
Martin Lewis warns that interest rates may not return to below 1 per cent
"There are many people out there that tell me 'I'm going to do X and Y and wait until base rates go back down to less than one per cent'," he told LBC.
"I think this happens because [younger people]...have only ever known interest rates of around half a per cent. Since 2007, we have had interest rates that have limboed very substantially below the 200-year historic interest rates.
"It's quite possible that these last 15,16-odd years - that was the anomaly. This isn't the anomaly, that is the anomaly."
His warning comes after the Bank of England hiked the base rate to 4 per cent on Thursday – a rise of 0.5 per cent in the 10th consecutive rise.
Interest rates are now at a 15 year high, with levels not seen since the autumn of 2008.
The Bank of England has predicted a recession of five consecutive quarters with gross domestic product (GDP) falling by 0.5 per cent this year, a shorter and shallower drop than previously thought.
Lewis added: "You cannot make a judgement on the basis that interest rates will go back to where they were. That is absolutely not a certainty.
"They may never go back to where they were - equally, they may go back to where they were, we just don't know.
The Bank of England raised interest rates to 4 per cent
"But I certainly think those people that they think they must go back to where they were, that is a very big assumption [and] not necessarily one to make your decision on."
The Bank made the decision to implement a 0.5 per cent increase as it continues to try and curb inflation, which has surged since Russia's invasion of Ukraine.
Today's interest rate increase will add nearly £50 a month onto the average borrowers’ mortgage payments.
Around 1.6 million Britons on variable rate mortgages will be impacted by the change.