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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 T: 01603 476210 E: Email Rachel
05/05/2022

Moneyfacts reacts to the BOE interest rate rise

The Bank of England has today increased base rate by 0.25%, up from 0.75% to 1.00%. 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 0.25%, up from 0.75% to 1.00%. 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

May-17

May-20

May-21

Nov-21

Apr-22

May-22

Standard variable rate (SVR)

4.59%

4.55%

4.41%

4.41%

4.71%

4.78%

Two-year fixed mortgage

2.30%

2.09%

2.57%

2.29%

2.86%

3.03%

Five-year fixed mortgage

2.89%

2.35%

2.79%

2.59%

3.01%

3.17%

10-year fixed mortgage

3.15%

2.64%

2.97%

2.99%

2.94%

3.21%

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

May-17

May-20

May-21

Nov-21

Apr-22

May-22

Standard variable rate (SVR)

4.59%

4.55%

4.41%

4.41%

4.71%

4.78%

Two-year fixed mortgage

2.30%

2.09%

2.57%

2.29%

2.86%

3.03%

Five-year fixed mortgage

2.89%

2.35%

2.79%

2.59%

3.01%

3.17%

10-year fixed mortgage

3.15%

2.64%

2.97%

2.99%

2.94%

3.21%

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 decision to increase base rate will be disappointing news to consumers who are already facing a cost of living crisis, with further rises anticipated over the next 12 months. Borrowers sitting on a variable rate may want to lock into a competitive fixed rate mortgage deal to protect themselves from rising interest rates, perhaps sooner rather than later as fixed rates rise, with the average two-year fixed rate surpassing 3.00%. Fixing for longer may be a logical choice for peace of mind with mortgage payments when other household costs are increasing. The differential rate between the average two-year and five-year fixed mortgage rate is much smaller than in previous years. However, aspiring homeowners may need to rethink whether they can even afford to step onto the property ladder due to rising costs and soaring house prices.

“Switching from a standard variable revert rate (SVR) to a fixed rate could significantly reduce someone’s mortgage repayment. The difference between the average two-year fixed mortgage rate and SVR stands at 1.75%, and the cost savings to switch from 4.78% to 3.03% is a difference of approximately £4,611 over two years*. A rise of 0.25% on the current SVR of 4.78% would add approximately £695* onto total repayments over two years.”

*Average standard variable rate (SVR) is currently 4.78%. 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 decision to increase base rate will be disappointing news to consumers who are already facing a cost of living crisis, with further rises anticipated over the next 12 months. Borrowers sitting on a variable rate may want to lock into a competitive fixed rate mortgage deal to protect themselves from rising interest rates, perhaps sooner rather than later as fixed rates rise, with the average two-year fixed rate surpassing 3.00%. Fixing for longer may be a logical choice for peace of mind with mortgage payments when other household costs are increasing. The differential rate between the average two-year and five-year fixed mortgage rate is much smaller than in previous years. However, aspiring homeowners may need to rethink whether they can even afford to step onto the property ladder due to rising costs and soaring house prices.

“Switching from a standard variable revert rate (SVR) to a fixed rate could significantly reduce someone’s mortgage repayment. The difference between the average two-year fixed mortgage rate and SVR stands at 1.75%, and the cost savings to switch from 4.78% to 3.03% is a difference of approximately £4,611 over two years*. A rise of 0.25% on the current SVR of 4.78% would add approximately £695* onto total repayments over two years.”

*Average standard variable rate (SVR) is currently 4.78%. Calculations based on a £200,000 mortgage over a 25-year term on a repayment basis.

Savings market analysis

Average savings rates

May-17

May-20

May-21

Nov-21

Apr-22

May-22

Easy access

0.38%

0.41%

0.16%

0.19%

0.33%

0.39%

Notice account

0.55%

0.92%

0.36%

0.53%

0.66%

0.78%

Easy access ISA

0.63%

0.63%

0.23%

0.26%

0.38%

0.46%

Notice ISA

0.76%

0.89%

0.33%

0.37%

0.51%

0.64%

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

May-17

May-20

May-21

Nov-21

Apr-22

May-22

Easy access

0.38%

0.41%

0.16%

0.19%

0.33%

0.39%

Notice account

0.55%

0.92%

0.36%

0.53%

0.66%

0.78%

Easy access ISA

0.63%

0.63%

0.23%

0.26%

0.38%

0.46%

Notice ISA

0.76%

0.89%

0.33%

0.37%

0.51%

0.64%

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:

“Loyal savers who have an easy access account with one of the biggest high-street brands are seeing little benefit from base rate rises, as many of these brands have passed on just 0.09% since December 2021 and none have passed on all three base rate rises, which equate to 0.65%**. The average easy access rate has risen by 0.20% since the start of November 2021, so there is still room for improvement across the sector, but as rates rise, comparing deals and switching is wise. As we have seen before, it can take a few months for customers to see any benefit from a base rate rise but there is no guarantee that savings providers will increase their rates. Should savers see 0.25% passed onto them, it would mean receiving £50 more a year in interest based on a £20,000 investment.

“The top rate tables for easy access accounts are experiencing some rivalry from challenger banks, which is great news for savers who prefer to keep their cash close to hand. There is no certainty for a top rate deal to last very long, but consumers can easily switch between accounts if they desire. If savers are using easy access accounts as a safety-net, they must check that they will not get penalised for withdrawals and ensure it’s still offering a competitive return. Overall, it is positive that savings rates are rising and hopefully will continue to do so in the weeks to come.”

**Brands considered as the biggest high-street banks include Barclays Bank, HSBC, Halifax, Lloyds Bank, NatWest/RBS, and Santander. Out of these, the following brands have not increased rates by 0.65% on these selected easy access accounts since the December 2021 base rate rise: Barclays Bank (Everyday Saver pays 0.01% at £10k gross), Halifax (Everyday Saver - pays 0.15% at £10k gross, up from 0.01%), HSBC (Online Bonus Saver - pays 0.45% at £10k gross, up from 0.05% and Flexible Saver - pays 0.10%, up from 0.01% at £10k gross), Lloyds Bank (Easy Saver – pays 0.10% at £10k gross, up from 0.01%), NatWest/RBS (Instant Saver - pays 0.10% 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:

“Loyal savers who have an easy access account with one of the biggest high-street brands are seeing little benefit from base rate rises, as many of these brands have passed on just 0.09% since December 2021 and none have passed on all three base rate rises, which equate to 0.65%**. The average easy access rate has risen by 0.20% since the start of November 2021, so there is still room for improvement across the sector, but as rates rise, comparing deals and switching is wise. As we have seen before, it can take a few months for customers to see any benefit from a base rate rise but there is no guarantee that savings providers will increase their rates. Should savers see 0.25% passed onto them, it would mean receiving £50 more a year in interest based on a £20,000 investment.

“The top rate tables for easy access accounts are experiencing some rivalry from challenger banks, which is great news for savers who prefer to keep their cash close to hand. There is no certainty for a top rate deal to last very long, but consumers can easily switch between accounts if they desire. If savers are using easy access accounts as a safety-net, they must check that they will not get penalised for withdrawals and ensure it’s still offering a competitive return. Overall, it is positive that savings rates are rising and hopefully will continue to do so in the weeks to come.”

**Brands considered as the biggest high-street banks include Barclays Bank, HSBC, Halifax, Lloyds Bank, NatWest/RBS, and Santander. Out of these, the following brands have not increased rates by 0.65% on these selected easy access accounts since the December 2021 base rate rise: Barclays Bank (Everyday Saver pays 0.01% at £10k gross), Halifax (Everyday Saver - pays 0.15% at £10k gross, up from 0.01%), HSBC (Online Bonus Saver - pays 0.45% at £10k gross, up from 0.05% and Flexible Saver - pays 0.10%, up from 0.01% at £10k gross), Lloyds Bank (Easy Saver – pays 0.10% at £10k gross, up from 0.01%), NatWest/RBS (Instant Saver - pays 0.10% 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 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