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Martin Lewis issues advice on how interest rate hike will affect mortgages and savings

Martin Lewis has taken to Twitter to explain what the Bank of England's interest rate increase means for you.

The Bank of England has announced it will hike interest rates to their highest in more than 13 years, from 1.75% to 2.25%. The bank also indicated it believes the economy is already in recession.

The central bank had previously projected the economy would grow in the current financial quarter but said it now believes Gross Domestic Product (GDP) will fall 0.1%. It comes after a reported 0.2% fall in GDP in the second quarter and would mean the economy is currently in recession, defined as a fall in GDP in two successive quarters.

READ MORE: What the hike in interest rates means for you and your wallet

After the announcement, Martin Lewis took to Twitter to explain how this would impact your mortgage and savings. He pointed out that this raise will bring interest rates up to their highest point since 2008.

How the rise will impact you depends on the type of mortgage you have, according to Martin. Those who are on a fixed mortgage may not notice an immediate change, but will see higher repayments once their current fix ends, while those on a variable mortgage could see their repayments rise straight away.

As for savings, Martin said people should be prepared to switch their accounts to get the best deal.

He said: "Bank of England's just increased UK base rates by 0.5% points from 1.75% to 2.25%. Highest since '08.

"FIXED MORTGAGE no change til it ends, then new fix'll be much costlier, VARIABLE MORTGAGE c£25/mth rise per £100k mortgage, SAVINGS many won't pass rise on, be prepared to switch."

In a separate tweet, he added: "PS with savings. The key is the top rate and top fixes will go up. So wait a day or two for new rate to be factored in, then check your savings, and if it is crap ditch and switch."

Martin also retweeted a statement from UK Mortgage Prisoners, a campaign group who want to highlight the unjust and unfair treatment of 250,000 mortgage prisoners.