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Moneyfacts reacts to the BOE interest rate rise

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Rachel Springall, Press Officer
Rachel Springall, Press Officer / Finance Expert 01603 476210 Email Rachel
22/09/2022

Moneyfacts reacts to the BOE interest rate rise

The Bank of England has today increased base rate by 0.50%, up from 1.75% to 2.25% Moneyfacts.co.uk has analysed the average rates offered across savings and mortgages and considers what this decision may mean for consumers moving forward.

Moneyfacts reacts to the BOE interest rate rise

The Bank of England has today increased base rate by 0.50%, up from 1.75% to 2.25% Moneyfacts.co.uk has analysed the average rates offered across savings and mortgages and considers what this decision may mean for consumers moving forward.

Mortgage market analysis

Average mortgage rates

Sep-17

Sep-20

Sep-21

Dec-21

Aug-22

Sep-22

Standard variable rate (SVR)

4.60%

4.44%

4.41%

4.40%

5.17%

5.40%

Two-year fixed mortgage

2.22%

2.24%

2.38%

2.34%

3.95%

4.24%

Five-year fixed mortgage

2.77%

2.49%

2.63%

2.64%

4.08%

4.33%

10-year fixed mortgage

3.23%

2.69%

2.99%

2.97%

4.19%

4.33%

Average rates shown are as at the first available day of the month, unless stated otherwise. Source: Moneyfacts.co.uk

 

Mortgage market analysis

Average mortgage rates

Sep-17

Sep-20

Sep-21

Dec-21

Aug-22

Sep-22

Standard variable rate (SVR)

4.60%

4.44%

4.41%

4.40%

5.17%

5.40%

Two-year fixed mortgage

2.22%

2.24%

2.38%

2.34%

3.95%

4.24%

Five-year fixed mortgage

2.77%

2.49%

2.63%

2.64%

4.08%

4.33%

10-year fixed mortgage

3.23%

2.69%

2.99%

2.97%

4.19%

4.33%

Average rates shown are as at the first available day of the month, unless stated otherwise. Source: Moneyfacts.co.uk

 

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

“The mortgage market has seen relentless rate rises this year, and borrowers coming off a fixed mortgage will find the cost to secure a new deal is much higher than they were perhaps anticipating. This could not come at a worse time amid a cost of living crisis when household budgets are stretched. However, failing to fix and falling onto a standard variable rate (SVR) is unwise, as the average rate has risen to its highest level in over a decade. Fixing for the longer-term may then be desirable, but it is unknown if interest rates will settle, and borrowers find themselves locked into a higher rate compared to new deals surfacing. Choosing the right deal is crucial and seeking advice to navigate the mortgage maze is wise.

“Remortgage customers may find they have more equity in their home due to rising house prices since the start of this year, but first-time buyers may now be facing a difficult time to afford the deposit required to secure a deal. That said, lenders are still offering an abundance of deals both for borrowers with a 5% or 10% deposit, some of which have no upfront fees and include cost-saving incentive packages. It’s imperative these borrowers compare the overall true cost of a deal and attempt to save on the upfront cost if they have used up most of their savings on a deposit.

“Borrowers sitting on a standard variable revert rate (SVR) who want to protect themselves from a rise in mortgage repayments could save thousands by switching to a fixed deal. The difference between the average two-year fixed mortgage rate and SVR stands at 1.16%, and the cost savings to switch from 5.40% to 4.24% is a difference of approximately £3,213 over two years*. A rise of 0.50% on the current SVR of 5.40% would add approximately £1,443* onto total repayments over two years.”

*Average standard variable rate (SVR) is currently 5.40%. Calculations based on a £200,000 mortgage over a 25-year term on a repayment basis.

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

“The mortgage market has seen relentless rate rises this year, and borrowers coming off a fixed mortgage will find the cost to secure a new deal is much higher than they were perhaps anticipating. This could not come at a worse time amid a cost of living crisis when household budgets are stretched. However, failing to fix and falling onto a standard variable rate (SVR) is unwise, as the average rate has risen to its highest level in over a decade. Fixing for the longer-term may then be desirable, but it is unknown if interest rates will settle, and borrowers find themselves locked into a higher rate compared to new deals surfacing. Choosing the right deal is crucial and seeking advice to navigate the mortgage maze is wise.

“Remortgage customers may find they have more equity in their home due to rising house prices since the start of this year, but first-time buyers may now be facing a difficult time to afford the deposit required to secure a deal. That said, lenders are still offering an abundance of deals both for borrowers with a 5% or 10% deposit, some of which have no upfront fees and include cost-saving incentive packages. It’s imperative these borrowers compare the overall true cost of a deal and attempt to save on the upfront cost if they have used up most of their savings on a deposit.

“Borrowers sitting on a standard variable revert rate (SVR) who want to protect themselves from a rise in mortgage repayments could save thousands by switching to a fixed deal. The difference between the average two-year fixed mortgage rate and SVR stands at 1.16%, and the cost savings to switch from 5.40% to 4.24% is a difference of approximately £3,213 over two years*. A rise of 0.50% on the current SVR of 5.40% would add approximately £1,443* onto total repayments over two years.”

*Average standard variable rate (SVR) is currently 5.40%. Calculations based on a £200,000 mortgage over a 25-year term on a repayment basis.

Savings market analysis

Average savings rates

Sep-17

Sep-20

Sep-21

Dec-21

Aug-22

Sep-22

Easy access

0.40%

0.22%

0.17%

0.20%

0.69%

0.85%

Notice account

0.68%

0.54%

0.47%

0.54%

1.17%

1.41%

Easy access ISA

0.63%

0.32%

0.25%

0.26%

0.76%

0.92%

Notice ISA

0.77%

0.54%

0.31%

0.37%

1.07%

1.21%

Averages based on £10,000 gross rate. Average rates shown are as at the first available day of the month, unless stated otherwise. Source: Moneyfacts.co.uk

 

Savings market analysis

Average savings rates

Sep-17

Sep-20

Sep-21

Dec-21

Aug-22

Sep-22

Easy access

0.40%

0.22%

0.17%

0.20%

0.69%

0.85%

Notice account

0.68%

0.54%

0.47%

0.54%

1.17%

1.41%

Easy access ISA

0.63%

0.32%

0.25%

0.26%

0.76%

0.92%

Notice ISA

0.77%

0.54%

0.31%

0.37%

1.07%

1.21%

Averages based on £10,000 gross rate. Average rates shown are as at the first available day of the month, unless stated otherwise. Source: Moneyfacts.co.uk

 

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

“The variable rate savings market has experienced a positive period of rejuvenation since the start of the year, but this is largely due to competition in the top rate tables, whereas the back-to-back Bank of England rate rises have yet to be fully embraced by every savings provider, particularly some of the biggest high street banks. Savers hoping to be rewarded for their loyalty will be disappointed that not one of the biggest high street banks has so far passed on all six base rate rises to easy access accounts since December 2021**, which equate to 1.65%. In fact, some have passed on just 0.09%. There are still easy access accounts out there paying less than base rate so it’s imperative savers compare and switch, especially if they have not reviewed their accounts in the past couple of months.

“As we have seen in the past, there is no guarantee that savers will benefit from a rate rise, but they will note a movement in the top rate tables which are dominated by challenger banks and building societies. Considering the more unfamiliar brands is incredibly important, and there is little reason to overlook them if they have the same protections in place as a well-known brand. Amid a cost of living crisis, making regular monthly savings may not be a priority for some, but it’s important consumers have enough money to fall back on to cover any emergencies.”

**Brands considered as the biggest high street banks include Barclays Bank, HSBC, Halifax, Lloyds Bank, NatWest/RBS and Santander. Barclays Bank (Everyday Saver pays 0.15% at £10k gross, up from 0.01%), Halifax (Everyday Saver - pays 0.45% at £10k gross, up from 0.01%), HSBC (Online Bonus Saver - pays 1.39% at £10k gross when no withdrawals made, up from 0.05% and Flexible Saver - pays 0.40%, up from 0.01% at £10k gross), Lloyds Bank (Easy Saver – pays 0.40% at £10k gross, up from 0.01%), NatWest/RBS (Instant Saver - pays 0.40% at £10k gross, up from 0.01%), Santander (Everyday Saver - pays 0.10% at £10k gross, up from 0.01%).

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

“The variable rate savings market has experienced a positive period of rejuvenation since the start of the year, but this is largely due to competition in the top rate tables, whereas the back-to-back Bank of England rate rises have yet to be fully embraced by every savings provider, particularly some of the biggest high street banks. Savers hoping to be rewarded for their loyalty will be disappointed that not one of the biggest high street banks has so far passed on all six base rate rises to easy access accounts since December 2021**, which equate to 1.65%. In fact, some have passed on just 0.09%. There are still easy access accounts out there paying less than base rate so it’s imperative savers compare and switch, especially if they have not reviewed their accounts in the past couple of months.

“As we have seen in the past, there is no guarantee that savers will benefit from a rate rise, but they will note a movement in the top rate tables which are dominated by challenger banks and building societies. Considering the more unfamiliar brands is incredibly important, and there is little reason to overlook them if they have the same protections in place as a well-known brand. Amid a cost of living crisis, making regular monthly savings may not be a priority for some, but it’s important consumers have enough money to fall back on to cover any emergencies.”

**Brands considered as the biggest high street banks include Barclays Bank, HSBC, Halifax, Lloyds Bank, NatWest/RBS and Santander. Barclays Bank (Everyday Saver pays 0.15% at £10k gross, up from 0.01%), Halifax (Everyday Saver - pays 0.45% at £10k gross, up from 0.01%), HSBC (Online Bonus Saver - pays 1.39% at £10k gross when no withdrawals made, up from 0.05% and Flexible Saver - pays 0.40%, up from 0.01% at £10k gross), Lloyds Bank (Easy Saver – pays 0.40% at £10k gross, up from 0.01%), NatWest/RBS (Instant Saver - pays 0.40% at £10k gross, up from 0.01%), Santander (Everyday Saver - pays 0.10% at £10k gross, up from 0.01%).

Notes to editors

Pioneering financial comparison technology for over 35 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfactscompare.co.uk is the financial product price comparison site, launched as Moneyfacts.co.uk in 2000 and rebranded to Moneyfactscompare.co.uk in 2023, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfactscompare.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

We hope you find this press release insightful. We would appreciate a link back to Moneyfactscompare.co.uk if you decide to source this information.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Notes to editors

Pioneering financial comparison technology for over 35 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfactscompare.co.uk is the financial product price comparison site, launched as Moneyfacts.co.uk in 2000 and rebranded to Moneyfactscompare.co.uk in 2023, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfactscompare.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

We hope you find this press release insightful. We would appreciate a link back to Moneyfactscompare.co.uk if you decide to source this information.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Contact Us If you're looking for extra comment, a chart or more information, then please give us a call. We are always more than happy to help.
Rachel Springall Press Officer / Finance Expert
Caitlyn Eastell Apprentice Press & PR Assistant