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

“Borrowers may be deeply concerned to see another base rate rise, particularly if they are sitting on a Standard Variable Rate (SVR) or are about to come off a low fixed rate. Amid a cost-of-living crisis, rising interest rates can have a devastating impact on borrowers who are already struggling to cover their monthly essentials and could well lead to a rise of ‘mortgage prisoners’. Those borrowers who are still on a competitive fixed rate deal for a few more years may want to consider overpaying their mortgage to reduce the size of their loan. However, those aiming to refinance on a fixed mortgage right now will find rates are around 3% more than they were a year ago. Despite rising fixed rates, it’s still worth considering a switch from a Standard Variable Rate for more peace of mind to guarantee the monthly mortgage payments, as the average SVR has risen to its highest point in over 15 years. A rate rise of 0.50% on the current average SVR of 7.52% would add approximately £1,576* onto total repayments over two years.

“Affordability remains a key concern for any borrower, some first-time buyers may put their plans to jump onto the property ladder on hold in hopes the housing supply shortage will improve and interest rate volatility calms. It is imperative new buyers can comfortably build a large enough deposit and meet their mortgage repayments, which may be challenging to meet if they have limited disposable income. Consumers looking to remortgage may find it difficult to afford higher interest rates, so seeking independent advice is essential to consider every option available to them, such as downsizing.”

*Average standard variable rate (SVR) is currently 7.52%. Calculations based on a £200,000 mortgage over a 25-year term on a repayment basis.

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

“A flurry of savings rate competition and consecutive Bank of England base rate rises continue to improve the savings market. Those savers earning variable rates of interest who take time to review their existing pots may find more attractive returns are available elsewhere, as their loyalty has not been rewarded. The top easy access accounts pay around 4%, with the market average around 2%, however, some of the biggest banks pay much less. Shopping around for a better deal is imperative in a volatile interest rate environment, so keeping an eye on the top rate tables and signing up to newsletters is wise. Challenger banks and building societies continue to offer some of the top returns and have the same deposit protections in place as the more familiar high street banks, so there is little reason to overlook them in favour of a well-known brand.

“Those savers making plans for their investment must choose the right account that suits their short or longer-term goals. Easy access accounts may be more appropriate for someone who may need the funds quickly, whereas notice accounts can be ideal for those planning to use their nest egg in a few months’ time, and they can also utilise their ISA allowance by using those that sit in the tax-free wrapper. Consumers with longer-term needs for their savings deposit could fix into a bond and pick a deal that pays monthly interest if they wish to supplement their income. Rising interest rates may also impact those with large pots, as they may breach their Personal Savings Allowance, so seeking advice and keeping on top of the latest deals to surface is essential.”

Due to the current volatility of interest rates, please see below for today’s average rates in support: Two-year fixed mortgage: 6.19%, Five-year fixed mortgage: 5.82%, 10-year fixed mortgage: 5.56%. Easy access: 2.35%, Notice account: 3.38%, Easy access ISA: 2.47%, Notice ISA: 3.24%.