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Moneyfacts reacts to interest rate rise by BOE

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Rachel Springall, Press Officer
Rachel Springall, Press Officer / Finance Expert T: 01603 476210 E: Email Rachel
16/12/2021

Moneyfacts reacts to interest rate rise by BOE

As the Bank of England has increased base rate by 0.15% up from 0.10% to 0.25%, Moneyfacts.co.uk has analysed the average rates offered across savings and mortgages over recent years and considers what this decision may mean for consumers moving forward.

Moneyfacts reacts to interest rate rise by BOE

As the Bank of England has increased base rate by 0.15% up from 0.10% to 0.25%, Moneyfacts.co.uk has analysed the average rates offered across savings and mortgages over recent years and considers what this decision may mean for consumers moving forward.

Mortgage market analysis

Average mortgage rates

Aug-18

Dec-18

Dec-19

Mar-20

Nov-21

Dec-21

Standard variable rate (SVR)

4.72%

4.90%

4.89%

4.90%

4.41%

4.40%

Two-year fixed mortgage

2.53%

2.51%

2.44%

2.43%

2.29%

2.34%

Five-year fixed mortgage

2.93%

2.92%

2.74%

2.74%

2.59%

2.64%

10-year fixed mortgage

3.10%

3.08%

2.77%

2.72%

2.99%

2.97%

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

Aug-18

Dec-18

Dec-19

Mar-20

Nov-21

Dec-21

Standard variable rate (SVR)

4.72%

4.90%

4.89%

4.90%

4.41%

4.40%

Two-year fixed mortgage

2.53%

2.51%

2.44%

2.43%

2.29%

2.34%

Five-year fixed mortgage

2.93%

2.92%

2.74%

2.74%

2.59%

2.64%

10-year fixed mortgage

3.10%

3.08%

2.77%

2.72%

2.99%

2.97%

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:

“Mortgage rate competition has been rife this year, so while there has been a rise to bank base rate, this would typically be passed on to revert rates and base rate tracker deals. Fixed mortgage rates have risen slightly since last month, but lenders are still fighting for new business and borrowers could stand to make a substantial saving by moving off a variable revert rate to a fixed rate.

“Borrowers sitting on their standard variable rate (SVR) may see their rate rise within a month or perhaps within the next three months, depending on their lender. The difference between the average two-year fixed mortgage rate and SVR stands at 2.06%, and the cost savings to switch from 4.40% to 2.34% is a difference of £5,250 over two years* approximately. A rise of 0.15% on the current SVR of 4.40% would add £408* approximately onto monthly repayments over two years.

*Average standard variable rate (SVR) is currently 4.40%. 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:

“Mortgage rate competition has been rife this year, so while there has been a rise to bank base rate, this would typically be passed on to revert rates and base rate tracker deals. Fixed mortgage rates have risen slightly since last month, but lenders are still fighting for new business and borrowers could stand to make a substantial saving by moving off a variable revert rate to a fixed rate.

“Borrowers sitting on their standard variable rate (SVR) may see their rate rise within a month or perhaps within the next three months, depending on their lender. The difference between the average two-year fixed mortgage rate and SVR stands at 2.06%, and the cost savings to switch from 4.40% to 2.34% is a difference of £5,250 over two years* approximately. A rise of 0.15% on the current SVR of 4.40% would add £408* approximately onto monthly repayments over two years.

*Average standard variable rate (SVR) is currently 4.40%. Calculations based on a £200,000 mortgage over a 25-year term on a repayment basis.

Savings market analysis

Average savings rates

Aug-18

Dec-18

Dec-19

Mar-20

Nov-21

Dec-21

Easy access

0.53%

0.64%

0.61%

0.57%

0.19%

0.20%

Notice account

0.86%

1.07%

1.10%

1.04%

0.53%

0.54%

Easy access ISA

0.82%

0.94%

0.87%

0.83%

0.26%

0.26%

Notice ISA

0.98%

1.14%

1.14%

1.13%

0.37%

0.37%

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

Aug-18

Dec-18

Dec-19

Mar-20

Nov-21

Dec-21

Easy access

0.53%

0.64%

0.61%

0.57%

0.19%

0.20%

Notice account

0.86%

1.07%

1.10%

1.04%

0.53%

0.54%

Easy access ISA

0.82%

0.94%

0.87%

0.83%

0.26%

0.26%

Notice ISA

0.98%

1.14%

1.14%

1.13%

0.37%

0.37%

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:

“Savers with their cash in a flexible account may have noticed it’s been a very volatile year of interest rate changes outside of any base rate change. Interest rates fell to record lows on average this year, but thankfully the market has been showing green shoots of recovery. This base rate change may take a few months to trickle down to savers who have a variable rate deal, but there is also no guarantee the rate will be passed onto them in full, or at all. Should savers see 0.15% passed onto them, it would mean receiving £30 more a year in interest based on a £20,000 investment.

“It remains the case that savers need to act swiftly to take advantage of the best deals and, as some easy access accounts pay as little as 0.01%, hopefully this base rate rise will shake any saver’s apathy to look elsewhere. The biggest high street banks are unlikely to be matching base rate on their easy access accounts, so savers would be wise to reconsider their loyalty.”

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

“Savers with their cash in a flexible account may have noticed it’s been a very volatile year of interest rate changes outside of any base rate change. Interest rates fell to record lows on average this year, but thankfully the market has been showing green shoots of recovery. This base rate change may take a few months to trickle down to savers who have a variable rate deal, but there is also no guarantee the rate will be passed onto them in full, or at all. Should savers see 0.15% passed onto them, it would mean receiving £30 more a year in interest based on a £20,000 investment.

“It remains the case that savers need to act swiftly to take advantage of the best deals and, as some easy access accounts pay as little as 0.01%, hopefully this base rate rise will shake any saver’s apathy to look elsewhere. The biggest high street banks are unlikely to be matching base rate on their easy access accounts, so savers would be wise to reconsider their loyalty.”

Notes to editors

Pioneering financial comparison technology for over 30 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.

Moneyfacts.co.uk is a financial product price comparison site, launched in 2000, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfacts.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 Moneyfacts.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 30 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.

Moneyfacts.co.uk is a financial product price comparison site, launched in 2000, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfacts.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 Moneyfacts.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.

 

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Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert