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Fresh electricity and gas bills and mortgages advice has been issued by money expert Martin Lewis after the shock news that energy bills are now forecast to soar by a truly eyewatering £1,000 later this year.
The rise, forecast by Cornwall Insight, suggests that the newly increased price cap in October is now set to hit £2,980 per year for an average family household, up from £1,277 last year, via £1,971 this March.
Because the numbers are based on an average bill’s unit rates, in reality your bill could be even higher in practice.
Read more: National Insurance tax cut from July 6 s how much extra cash you’ll get is revealed
The depressing numbers mean that energy bills are set to increase by as much as 51%. 51%!
Martin Lewis as recently as a few weeks ago advised that people who are coming to the end of their current fixes, or are on the variable tariff now, might want to look at securing a new fix through their existing suppliers if they can find one for 35-40% more than they are currently paying.
But now in the wake of forecasts of a 51% rise, Martin Lewis is advising people to fix if they can find a deal at no more than 40% higher than the price cap, or 45% ‘if you very strongly value certainty’.
(Image: ITV)
The reason for that advice is that although you would lose the 40% extra you pay between now and October, you will save the other 11% per month between October and the end of the fixed period, so it could save you money in the medium to long term depending on the length of the fix.
The other factor is that currently no firm is offering an open market fix cheaper than the next price rise, so your best bet is to approach your current supplier for an existing customer deal – some of which are reported to be priced at around 37-42% higher than the current price cap, but would come in lower than a 51% rise.
And Martin has also warned people with mortgages that the cheapest fixes are rapidly disappearing.
Recently on his ITV show the money expert had warned mortgage customers of a ‘ticking timebomb’ because interest rate rises would see the cheapest long term fixes withdrawn from the market.
Following this week’s Bank Of England base rate rise, and predictions of more increases in future, Martin says the cheapest mortgage rates for a fixed deal are now as high as 2.49% over two years or 2.73% over 10 years, a marked increase on previous sub-1% deals.
And if interest rates keep rising, the cheapest deals will keep rising, so it would be a good idea to check on your mortgage rate and how long you have left asap in case you need to take action. Customers can often re-fix with their existing lender even if they have 6 months left on their fix deal.
Each 1% extra on your mortgage rate costs you £1,500 a year on a £250,000 mortgage, or £3,000 a year on a £500,000 mortgage, so every slight uptick in rates could cost you thousands.
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