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:

“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%).