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

“This latest base rate rise will be disappointing news to borrowers who are already facing a cost of living crisis and recent turmoil surrounding mortgage interest rates. Consumers may breathe a sigh of relief to see fixed mortgage rates have started to drop in recent weeks and hope these rates will fall further. However, the cost to secure a new fixed deal is much higher than they may realise, as both the average two- and five-year fixed rates have increased by over 3% during the past year. The erratic behaviour in mortgage pricing makes it essential for borrowers to seek advice to scrutinise all the options available to them.

“Whether now is the time to grab a new deal depends entirely on someone’s circumstances. As fixed rates are expected to come down further, borrowers may wish to wait and see what the next few weeks will bring. However, those who are sitting on a standard variable rate (SVR) may wish to note the impact the base rate rises will have on their repayments. Since December 2021, the average SVR has risen by 2% and, as lenders are traditionally quick to pass on base rate rises, it will impact on someone’s monthly repayments. A rise of 0.50% on the current average SVR of 6.40% would add approximately £1,509* onto total repayments over two years.

“Moving into 2023, it will be interesting to see how demand for mortgages will be impacted as further base rate rises are expected and house prices are predicted to fall. If borrowers are looking to refinance next year, they may want to start building a savings pot to pay for any associated costs and be conscious that mortgage rates are much higher than they might expect. First-time buyers may feel disheartened about their chances of finding an affordable property considering the cost of living crisis, but when it comes down to applying for a mortgage, it’s always worth seeking advice to go through the options first, particularly if borrowers have a limited 5% deposit.”

*Average standard variable rate (SVR) is currently 6.40%. 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:

“Savers may be pleased to see rates rise across variable cash accounts, especially as easy access accounts remain a firm favourite due their flexibility. As rates continue to improve it is vital savers review their accounts and switch to take advantage of the latest top rates. There is never a guarantee for base rate to be passed on to savers, so they could well find their loyalty is not being rewarded. In fact, the majority of the biggest high street banks** have failed to pass every Bank of England base rate rise to easy access accounts over the past year, with one brand passing on just 0.39% since December 2021.

“Those savers looking for the best possible return on their cash who do not want to tie it down for the longer-term could instead choose a notice account, and interest rates have improved greatly in this area of the market this year. Those savers who wish to utilise their ISA allowance will find rates are much higher now than at the start of 2022, but it is always worth considering any Personal Savings Allowance when comparing ISA and non-ISA accounts. Moving into 2023, it is anticipated that variable savings rates will continue to rise across the board, and it will be down to savers to keep abreast of rate changes and switch if they are getting a poor return on their hard-earned cash.”

**Brands considered as the biggest high street banks include Barclays Bank, HSBC, Halifax, Lloyds Bank and Santander. Barclays Bank (Everyday Saver pays 0.50% at £10k gross, up from 0.01%), Halifax (Everyday Saver - pays 0.55% at £10k gross, up from 0.01%), HSBC (Online Bonus Saver - pays 2.97% at £10k gross when no withdrawals made, up from 0.05% and Flexible Saver - pays 0.65%, up from 0.01% at £10k gross), Lloyds Bank (Easy Saver – pays 0.50% at £10k gross, up from 0.01%), Santander (Everyday Saver - pays 0.40% at £10k gross, up from 0.01%).