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

“The mortgage market has seen a bustle of activity over the last month, with the Bank of England base rate cut, and a more favourable swap rate market, creating a positive influence on fixed rate pricing. There have also been several lenders passing on the 0.25% base rate cut to customers, leading to the Standard Variable Rate (SVR) falling below 8% for the first time since August 2023. The expectations for another base rate cut are mixed, but it looks more likely that the next drop could come in November, which is after the Budget.

“New or existing borrowers will ideally want to see mortgage rates fall further in the months to come, particularly if they are about to come off a cheap fixed deal. Any borrower looking at their options today for peace of mind could lock into a fixed mortgage early, but it would be understandable for some to adopt a ‘wait and see’ approach, hoping rates will come down by bigger margins. However, when falling off a cheap rate onto a revert rate, borrowers will typically see their monthly repayments rise, so seeking advice to weigh up all their options before their deal ends is essential. A typical mortgage being charged the current average SVR of 7.99% would be paying £383 more per month, compared to a typical two-year fixed rate*.

“Affordability remains a key issue for borrowers, particularly first-time buyers, but overall average mortgage rates are slowly dipping down to levels not seen for around six months. This month also marks the two-year anniversary of the fiscal announcement, so any borrowers about to come off a two-year fixed deal may be pleased to see the market is much more stable and lenders continue to chop rates to entice new business.”

*Average standard variable rate (SVR) is currently 7.99%. Calculations based on a £250,000 mortgage over a 25-year term on a repayment basis. SVR repayment £1,927 per month, versus £1,544 per month on 5.56% two-year fixed rate.

Savings market analysis

• Average rates across easy access, notice and their Cash ISA equivalents have fallen month-on-month, but remain higher than a year ago. The average easy access rate has fallen from 3.15% since August 2024, the average easy access ISA rate has fallen from 3.36%.
• In September 2023, the average easy access account rate was less than 3%, at 2.96%, the average easy access ISA rate was slightly higher at 3.04%. Since the start of March 2024, the average easy access savings rate has fallen from 3.18% to 3.08% and the average easy access ISA rate fell from 3.32% to 3.29%.
• In September 2023, the average notice account and notice ISA rates were 4.14% and 3.89%, respectively. The average notice rate is now 4.23%, down from 4.28% in March 2024 and the average rate on a notice ISA has fallen from 4.15% to 4.08%. The average notice rate and average notice ISA rate fell month-on-month.

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

“The savings market has seen several brands cut variable rates since the Bank of England base rate cut last month, but not every provider has slashed rates by the full 0.25%. Savers would be wise to review their pots considering the base rate cut to ensure its still paying a competitive return. Easy access accounts remain a popular choice among savers for their flexibility, but the convenience of using one of the biggest high street banks can come at a cost. The average easy access rate paid across the biggest high street banks is 1.93%**, which is less than the current market average easy access rate across all savings providers. Loyalty does not always pay, so savers would be wise to seek out the top rates from the more unfamiliar brands.

“There is an expectation that base rate will be cut twice more before the year is over, so savers need to prepare themselves for more interest rate cuts. Those who are happy to lock their cash away for a guaranteed return could look towards a fixed rate bond or fixed Cash ISA, and with rates expected to decrease further, savers may wish to choose a longer-term deal. Challenger banks and building societies continue to offer some of the top returns and have the same deposit protections in place as the more familiar high street banks, so there is little reason to overlook them in favour of a well-known brand. Whichever account savers decide to open, its essential they pick one that suits their needs, but if it’s an easy access account, make time to review the rate regularly.”

**High street banks include Bank of Scotland, Barclays Bank, Halifax, HSBC, Lloyds Bank, NatWest, Royal Bank of Scotland and Santander. Averages collected from gross interest rates paid across all live easy access accounts with these brands based on a £10,000 deposit, latest rates as at 16 September 2024.