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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
03/11/2022

Moneyfacts reacts to the BOE interest rate rise

The Bank of England has today increased base rate by 0.75%, up from 2.25% to 3.00% 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 0.75%, up from 2.25% to 3.00% 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

Nov-17

Nov-20

Nov-21

Dec-21

Oct-22

Nov-22

Standard variable rate (SVR)

4.60%

4.44%

4.41%

4.40%

5.63%

5.86%

Two-year fixed mortgage

2.33%

2.43%

2.29%

2.34%

5.43%

6.47%

Five-year fixed mortgage

2.88%

2.70%

2.59%

2.64%

5.23%

6.32%

10-year fixed mortgage

3.06%

2.84%

2.99%

2.97%

5.41%

5.65%

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

Nov-17

Nov-20

Nov-21

Dec-21

Oct-22

Nov-22

Standard variable rate (SVR)

4.60%

4.44%

4.41%

4.40%

5.63%

5.86%

Two-year fixed mortgage

2.33%

2.43%

2.29%

2.34%

5.43%

6.47%

Five-year fixed mortgage

2.88%

2.70%

2.59%

2.64%

5.23%

6.32%

10-year fixed mortgage

3.06%

2.84%

2.99%

2.97%

5.41%

5.65%

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 unnerving uncertainty surrounding interest rate pricing on mortgages has been prevalent over the past couple of months. This latest base rate rise may well stir further concerns on how this will flow through the market and impact the mortgage repayments of consumers who are already facing a cost of living crisis. Due to the unpredictable nature of the mortgage arena, it is imperative that both those looking to purchase a property or who wish to refinance seek independent advice from a broker to navigate the options available to them.

“Amid interest rate rises, fixing for the longer-term may be an attractive choice for those who want peace of mind with their mortgage repayments. However, whether now is the time to take out a new deal really will depend on someone’s circumstances, particularly for first-time buyers who may be struggling to build a deposit and who have limited disposable income. That said, because of rising house prices, those remortgaging may find they have more equity in their home to drop down into a lower loan-to-value bracket, where more competitive interest rates could be found.

“It is unknown whether borrowers would be better off coming out of their fixed mortgage deal early to refinance right now or wait and fall onto their revert rate, because everyone’s circumstances are different. However, sitting on a variable rate does not guarantee peace of mind in the months to come. Depending on how long someone has left on their fixed deal, they may be prepared to accept an early repayment charge to potentially save on their monthly repayments overall with a new deal amid rising interest rates. The average standard variable rate (SVR) has steadily been rising, and a further rise of 0.75% on the current SVR of 5.86% would add approximately £2,223* onto total repayments over two years.”

*Average standard variable rate (SVR) is currently 5.86%. 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 unnerving uncertainty surrounding interest rate pricing on mortgages has been prevalent over the past couple of months. This latest base rate rise may well stir further concerns on how this will flow through the market and impact the mortgage repayments of consumers who are already facing a cost of living crisis. Due to the unpredictable nature of the mortgage arena, it is imperative that both those looking to purchase a property or who wish to refinance seek independent advice from a broker to navigate the options available to them.

“Amid interest rate rises, fixing for the longer-term may be an attractive choice for those who want peace of mind with their mortgage repayments. However, whether now is the time to take out a new deal really will depend on someone’s circumstances, particularly for first-time buyers who may be struggling to build a deposit and who have limited disposable income. That said, because of rising house prices, those remortgaging may find they have more equity in their home to drop down into a lower loan-to-value bracket, where more competitive interest rates could be found.

“It is unknown whether borrowers would be better off coming out of their fixed mortgage deal early to refinance right now or wait and fall onto their revert rate, because everyone’s circumstances are different. However, sitting on a variable rate does not guarantee peace of mind in the months to come. Depending on how long someone has left on their fixed deal, they may be prepared to accept an early repayment charge to potentially save on their monthly repayments overall with a new deal amid rising interest rates. The average standard variable rate (SVR) has steadily been rising, and a further rise of 0.75% on the current SVR of 5.86% would add approximately £2,223* onto total repayments over two years.”

*Average standard variable rate (SVR) is currently 5.86%. Calculations based on a £200,000 mortgage over a 25-year term on a repayment basis.

Savings market analysis

Average savings rates

Nov-17

Nov-20

Nov-21

Dec-21

Oct-22

Nov-22

Easy access

0.39%

0.22%

0.19%

0.20%

0.98%

1.16%

Notice account

0.69%

0.51%

0.53%

0.54%

1.64%

1.95%

Easy access ISA

0.62%

0.31%

0.26%

0.26%

1.06%

1.26%

Notice ISA

0.82%

0.54%

0.37%

0.37%

1.49%

1.72%

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

Nov-17

Nov-20

Nov-21

Dec-21

Oct-22

Nov-22

Easy access

0.39%

0.22%

0.19%

0.20%

0.98%

1.16%

Notice account

0.69%

0.51%

0.53%

0.54%

1.64%

1.95%

Easy access ISA

0.62%

0.31%

0.26%

0.26%

1.06%

1.26%

Notice ISA

0.82%

0.54%

0.37%

0.37%

1.49%

1.72%

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:

“Interest rates on variable cash accounts continue to improve due to a combination of provider competition in the top rate tables and consecutive base rate rises. Savers who want the flexibility of an easy access account will find the average rate is now over 1%, the first time this level has been breached in a decade, and top rates now exceed 2%. However, there are still accounts out there paying less than 1% and, as we have seen in the past, there is no guarantee that savers will benefit from a base rate rise.

“The majority of the biggest high street banks have failed to pass the full Bank of England base rate rises to easy access accounts, with one brand passing on just 0.14% since December 2021**. Out of the biggest brands**, only HSBC has made notable rises to the rate on its Online Bonus Saver, up from 0.05% to 2.96%, a rise of 2.91% since December 2021. This improvement is beyond the seven base rate rises which equated to 2.15%, and as many other brands trail behind, it’s vital savers compare deals carefully and reconsider any loyalty they have in favour of a better deal elsewhere. It is also worth keeping in mind that the HSBC Online Bonus Saver does not permit withdrawals to earn 2.96%, and if one or more withdrawal is made the rate would fall to 0.50%, so this type of easy access account may not suit savers looking for unlimited flexibility during uncertain times.

“Challenger banks and building societies currently offer some of the best rates across easy access, notice and equivalent ISAs, but the terms and conditions of these accounts can vary considerably. During a cost of living crisis, quick access to cash would be a desirable feature to cover any unexpected costs, so savers will need to compare deals carefully on outset and take into consideration both the interest rate and the accessibility of an account.”

**Brands considered as the biggest high street banks include Barclays Bank, HSBC, Halifax, Lloyds Bank, NatWest/RBS and Santander. Barclays Bank (Everyday Saver pays 0.25% 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 2.96% at £10k gross when no withdrawals made, up from 0.05% and Flexible Saver - pays 0.50%, 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 0.50% at £10k gross, up from 0.01%), Santander (Everyday Saver - pays 0.20% at £10k gross, up from 0.01%).

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

“Interest rates on variable cash accounts continue to improve due to a combination of provider competition in the top rate tables and consecutive base rate rises. Savers who want the flexibility of an easy access account will find the average rate is now over 1%, the first time this level has been breached in a decade, and top rates now exceed 2%. However, there are still accounts out there paying less than 1% and, as we have seen in the past, there is no guarantee that savers will benefit from a base rate rise.

“The majority of the biggest high street banks have failed to pass the full Bank of England base rate rises to easy access accounts, with one brand passing on just 0.14% since December 2021**. Out of the biggest brands**, only HSBC has made notable rises to the rate on its Online Bonus Saver, up from 0.05% to 2.96%, a rise of 2.91% since December 2021. This improvement is beyond the seven base rate rises which equated to 2.15%, and as many other brands trail behind, it’s vital savers compare deals carefully and reconsider any loyalty they have in favour of a better deal elsewhere. It is also worth keeping in mind that the HSBC Online Bonus Saver does not permit withdrawals to earn 2.96%, and if one or more withdrawal is made the rate would fall to 0.50%, so this type of easy access account may not suit savers looking for unlimited flexibility during uncertain times.

“Challenger banks and building societies currently offer some of the best rates across easy access, notice and equivalent ISAs, but the terms and conditions of these accounts can vary considerably. During a cost of living crisis, quick access to cash would be a desirable feature to cover any unexpected costs, so savers will need to compare deals carefully on outset and take into consideration both the interest rate and the accessibility of an account.”

**Brands considered as the biggest high street banks include Barclays Bank, HSBC, Halifax, Lloyds Bank, NatWest/RBS and Santander. Barclays Bank (Everyday Saver pays 0.25% 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 2.96% at £10k gross when no withdrawals made, up from 0.05% and Flexible Saver - pays 0.50%, 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 0.50% at £10k gross, up from 0.01%), Santander (Everyday Saver - pays 0.20% 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