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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
04/08/2022

Moneyfacts reacts to the BOE interest rate rise

The Bank of England has today increased base rate by 0.50%, up from 1.25% to 1.75%. 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 1.25% to 1.75%. 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

Aug-17

Aug-20

Aug-21

Dec-21

Jul-22

Aug-22

Standard variable rate (SVR)

4.60%

4.46%

4.40%

4.40%

5.06%

5.17%

Two-year fixed mortgage

2.24%

2.08%

2.52%

2.34%

3.74%

3.95%

Five-year fixed mortgage

2.80%

2.34%

2.75%

2.64%

3.89%

4.08%

10-year fixed mortgage

3.23%

2.59%

3.00%

2.97%

4.01%

4.19%

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-17

Aug-20

Aug-21

Dec-21

Jul-22

Aug-22

Standard variable rate (SVR)

4.60%

4.46%

4.40%

4.40%

5.06%

5.17%

Two-year fixed mortgage

2.24%

2.08%

2.52%

2.34%

3.74%

3.95%

Five-year fixed mortgage

2.80%

2.34%

2.75%

2.64%

3.89%

4.08%

10-year fixed mortgage

3.23%

2.59%

3.00%

2.97%

4.01%

4.19%

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:

“Borrowers who have not locked into a fixed rate would be wise to move quickly to secure a new deal as interest rates continue to climb. Fixing for longer may be in the mindset for some, as there is anticipation for further base rate rises to come. Consumers will find that the average five-year fixed rate has breached 4%, and the rate gap between this and the average 10-year fixed rate has closed in since December 2021.

“The cost of living crisis, interest rate rises and house price growth could price out would-be buyers if they have little disposable income and subsequently eat into their savings. On the other hand, remortgage customers may find they have more equity in their home but will need to get some independent advice on whether they can comfortably afford to switch their deal.

“Borrowers sitting on a standard variable revert rate (SVR) who want to shield themselves from a rise in mortgage repayments could stand to save a decent sum by switching to a fixed deal. The difference between the average two-year fixed mortgage rate and SVR stands at 1.22%, and the cost savings to switch from 5.17% to 3.95% is a difference of approximately £3,333 over two years*. A rise of 0.50% on the current SVR of 5.17% would add approximately £1,400* onto total repayments over two years.”

*Average standard variable rate (SVR) is currently 5.17%. 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:

“Borrowers who have not locked into a fixed rate would be wise to move quickly to secure a new deal as interest rates continue to climb. Fixing for longer may be in the mindset for some, as there is anticipation for further base rate rises to come. Consumers will find that the average five-year fixed rate has breached 4%, and the rate gap between this and the average 10-year fixed rate has closed in since December 2021.

“The cost of living crisis, interest rate rises and house price growth could price out would-be buyers if they have little disposable income and subsequently eat into their savings. On the other hand, remortgage customers may find they have more equity in their home but will need to get some independent advice on whether they can comfortably afford to switch their deal.

“Borrowers sitting on a standard variable revert rate (SVR) who want to shield themselves from a rise in mortgage repayments could stand to save a decent sum by switching to a fixed deal. The difference between the average two-year fixed mortgage rate and SVR stands at 1.22%, and the cost savings to switch from 5.17% to 3.95% is a difference of approximately £3,333 over two years*. A rise of 0.50% on the current SVR of 5.17% would add approximately £1,400* onto total repayments over two years.”

*Average standard variable rate (SVR) is currently 5.17%. Calculations based on a £200,000 mortgage over a 25-year term on a repayment basis.

Savings market analysis

Average savings rates

Aug-17

Aug-20

Aug-21

Dec-21

Jul-22

Aug-22

Easy access

0.39%

0.22%

0.18%

0.20%

0.59%

0.69%

Notice account

0.63%

0.49%

0.44%

0.54%

1.07%

1.17%

Easy access ISA

0.62%

0.32%

0.24%

0.26%

0.65%

0.76%

Notice ISA

0.78%

0.52%

0.31%

0.37%

0.93%

1.07%

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-17

Aug-20

Aug-21

Dec-21

Jul-22

Aug-22

Easy access

0.39%

0.22%

0.18%

0.20%

0.59%

0.69%

Notice account

0.63%

0.49%

0.44%

0.54%

1.07%

1.17%

Easy access ISA

0.62%

0.32%

0.24%

0.26%

0.65%

0.76%

Notice ISA

0.78%

0.52%

0.31%

0.37%

0.93%

1.07%

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 may not be benefiting from the base rate rises and they could be missing out on a better return if they fail to compare deals and switch. Interest rates are rising across the savings spectrum. However, out of the biggest high street banks, only one has passed on all five base rate rises, which equate to 1.15%**, and some have passed on just 0.09% since December 2021. The patience of some savers may be wearing thin, but there is no guarantee they will see any benefit from a base rate rise. Thankfully, challenger banks and building societies continue to compete in this space and the average easy access rate has risen to 0.69%, up from 0.20% in December 2021. With this in mind, there are still accounts out there that fail to beat base rate so there is still more room for improvement.

“Keeping abreast of the top rate tables is essential and there is little reason for savers to overlook the more unfamiliar brands if they have the same protections in place as a big high street bank. Easy access accounts remain popular, but savers must be sure to check the terms and conditions as not every deal will give them complete flexibility. In times of uncertainty, it’s wise to have quick access to funds to fall back on to cover unexpected costs.”

**Brands considered as the biggest high street banks include Barclays Bank, HSBC, Halifax, Lloyds Bank, NatWest/RBS and Santander. Barclays Bank (Everyday Saver pays 0.01% at £10k gross), Halifax (Everyday Saver - pays 0.25% at £10k gross, up from 0.01%), HSBC (Online Bonus Saver - pays 1.29% at £10k gross when no withdrawals made, up from 0.05% and Flexible Saver - pays 0.20%, up from 0.01% at £10k gross), Lloyds Bank (Easy Saver – pays 0.20% at £10k gross, up from 0.01%), NatWest/RBS (Instant Saver - pays 0.20% 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 may not be benefiting from the base rate rises and they could be missing out on a better return if they fail to compare deals and switch. Interest rates are rising across the savings spectrum. However, out of the biggest high street banks, only one has passed on all five base rate rises, which equate to 1.15%**, and some have passed on just 0.09% since December 2021. The patience of some savers may be wearing thin, but there is no guarantee they will see any benefit from a base rate rise. Thankfully, challenger banks and building societies continue to compete in this space and the average easy access rate has risen to 0.69%, up from 0.20% in December 2021. With this in mind, there are still accounts out there that fail to beat base rate so there is still more room for improvement.

“Keeping abreast of the top rate tables is essential and there is little reason for savers to overlook the more unfamiliar brands if they have the same protections in place as a big high street bank. Easy access accounts remain popular, but savers must be sure to check the terms and conditions as not every deal will give them complete flexibility. In times of uncertainty, it’s wise to have quick access to funds to fall back on to cover unexpected costs.”

**Brands considered as the biggest high street banks include Barclays Bank, HSBC, Halifax, Lloyds Bank, NatWest/RBS and Santander. Barclays Bank (Everyday Saver pays 0.01% at £10k gross), Halifax (Everyday Saver - pays 0.25% at £10k gross, up from 0.01%), HSBC (Online Bonus Saver - pays 1.29% at £10k gross when no withdrawals made, up from 0.05% and Flexible Saver - pays 0.20%, up from 0.01% at £10k gross), Lloyds Bank (Easy Saver – pays 0.20% at £10k gross, up from 0.01%), NatWest/RBS (Instant Saver - pays 0.20% 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