Martin Lewis warns fixed rate mortgage holders of ‘enormous’ problem

Financial journalist Martin Lewis told BBC Radio 4’s Today programme this morning that people with fixed-rate deals coming to an end need to plan ahead to avoid a ‘horrendous shock’. He urged people to start looking for another deal six months ahead of when their fixed rate ends – and to put a reminder in their calendar for this time.He warned of an ‘absolutely enormous shock’ for people looking for a new fixed rate as products currently on the market will have a far higher interest rate, with much bigger repayments.He said that for fixed rates, for each percentage rise it adds another £60 a month, for each £100,000 of mortgage.The founder of Money Saving Expert said: ‘We’re talking getting on for £800 a year, you times that by a rise, for many people, of five percent on their mortgage.’We’re talking £4,000 a year per £100,000 in some cases at the extreme end for the biggest range.READ MORE: Mortgage holders who are ‘worried about rates’ urged to make important check or risk fee Martin Lewis has urged people on fixed rate mortgages to prepare for when their deal ends (Image: GETTY)’It’s going to be a horrendous shock for people. So people do need to absolutely be preparing for that now.’We may see fixed rates coming off. They have come off slightly from where they were before.’They won’t have gone up on the back of yesterday’s news. Most of that was baked into fixed rates, which tend to move more with gilts and swap rates, than they move with the rate the Bank of England is setting.’He said longer fixed rates are currently better than short-term deals in many cases, with fixing for 10 years looking ‘competitive’. The base interest rate has continued to rise (Image: GETTY)He said: ‘Savings is very plain. If you have savings in a big bank right now, then you will not be getting in most cases any benefit of UK interest rate rises.’The only way to get that benefit is to become an active, aggressive saver, that’s constantly looking, constantly shifting, constantly moving.’David Ingram, founder of MyLocalMortgage, warned rising interest rates mean Britons are unable to borrow as much as they previously could.He said: ‘A family previously able to borrow £300,000 based on their earnings and expenditure might now only be able to borrow £200,000.’Without their personal circumstances changing, they are able to borrow much less. This shift in buying power will likely mean the inflated house prices and bidding wars we’ve seen of the last few years will slow down, with fewer buyers in the market and more modest budgets available.’The Today programme airs on BBC Radio 4 from Monday to Friday at 6am and on Saturdays at 7am.