Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:

“The downward turn in fixed mortgage rates has gone in the opposite direction over the past month, with lenders vigorously re-pricing deals in response to volatile swap rates. It is worth noting that rates are much lower than six months ago, when both the average two- and five-year fixed mortgage rates were over 6%. The last time the Bank of England increased base rate was back in August 2023, but no change does not mean stagnation in mortgage rates as other influences remain at play, so borrowers must not be complacent if they are searching for a new deal. Indeed, lenders have been quick to reassess their rate pricing over the past month and even pulled deals from the market. It is vital lenders consider the volatility surrounding swap rates, so mortgage rate pricing can quickly change direction in a matter of weeks. Despite notable rate cuts made between the start of January and February, the average two- and five-year rates saw a sizeable cut.

“Borrowers worried about securing a new deal would be wise to seek advice from an independent broker, and any existing customers should speak to their lender immediately if they are struggling with repayments. Those coming off a fixed rate deal will find the average Standard Variable Rate (SVR) stands above 8%, so it’s much higher than the average two-year fixed rate. A typical mortgage being charged the current average SVR of 8.18% would be paying around £308 more per month, compared to a typical two-year fixed rate (5.76%)*. First-time buyers with limited deposits would be wise to seek advice in the first instance when looking for a mortgage, but their biggest hurdle to become a homeowner is finding an appropriate property while affordable housing remains in short supply.”

*Average standard variable rate (SVR) is currently 8.18%. Calculations based on a £200,000 mortgage over a 25-year term on a repayment basis. SVR repayment £1,567 per month, versus £1,259 per month on 5.76% two-year fixed rate.

Savings market analysis

• Since the start of September 2023, the average easy access savings rate has risen from 2.96% to 3.18% and the average easy access ISA rate has risen from 3.04% to 3.32%. These average rates rose month-on-month from 3.17% and 3.30% respectively.
• On a notice account, the average rate has risen from 4.14% to 4.28% since September 2023. The average rate on a notice ISA has seen similar growth, up from 3.89% to 4.15%. However, these average rates fell month-on-month from 4.30% and 4.16% respectively.

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:

“Savings providers continue to keep a close eye on future rate expectations, with variable rates seeing a mix of rises and falls across easy access, notice and Cash ISAs over the past six months. Most recently, this area of the savings market has shown a sign of resilience compared to fixed rates, where month-on-month, fixed bond pricing calmed in the aftermath of rate cuts. The unpredictable nature of interest rates results in a challenging situation for savers comparing accounts, as some of the best deals can be withdrawn relatively quickly. Challenger banks have been particularly active in recent weeks, adjusting their market positions in the top rate tables, such as those improving their rates to entice new deposits.

“One area of the savings market to see improvements has been Cash ISAs, largely expected during ISA season. Consumers comparing the top easy access Cash ISAs would be wise to check the terms and conditions of these accounts carefully, as some of the best rates are offered on accounts that carry withdrawal restrictions, include a bonus, or are linked to another account. It will be down to the saver to ensure they pick the right type of Cash ISA to suit their needs. Even if they invest just a small amount for now, they need to use their 2023/24 ISA allowance before 6 April or lose it.

“A base rate cut could have a detrimental impact on the savings market. As we have seen in the past, rate cuts typically get passed on quickly compared to rises. As it stands there are already many savers out there who are not being paid a decent return for their loyalty and any future rate cuts could see their savings interest rates slashed. Savers must take time to review their existing account and switch if they are getting a raw deal.”