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Moneyfacts reacts to the interest rate rise by BOE

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Rachel Springall, Press Officer
Rachel Springall, Press Officer / Finance Expert T: 01603 476210 E: Email Rachel
03/02/2022

Moneyfacts reacts to the interest rate rise by BOE

The Bank of England has today increased base rate by 0.25% up from 0.25% to 0.50%. 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 interest rate rise by BOE

The Bank of England has today increased base rate by 0.25% up from 0.25% to 0.50%. 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-18

Dec-18

Feb-21

Dec-21

Jan-22

Feb-22

Standard variable rate (SVR)

4.72%

4.90%

4.41%

4.40%

4.41%

4.46%

Two-year fixed mortgage

2.53%

2.51%

2.53%

2.34%

2.38%

2.44%

Five-year fixed mortgage

2.93%

2.92%

2.73%

2.64%

2.66%

2.71%

10-year fixed mortgage

3.10%

3.08%

2.85%

2.97%

2.97%

2.85%

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-18

Dec-18

Feb-21

Dec-21

Jan-22

Feb-22

Standard variable rate (SVR)

4.72%

4.90%

4.41%

4.40%

4.41%

4.46%

Two-year fixed mortgage

2.53%

2.51%

2.53%

2.34%

2.38%

2.44%

Five-year fixed mortgage

2.93%

2.92%

2.73%

2.64%

2.66%

2.71%

10-year fixed mortgage

3.10%

3.08%

2.85%

2.97%

2.97%

2.85%

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:

“Mortgage rates are on the rise, and this base rate rise may come as disappointing news to borrowers who are not locked into a competitive rate. Lenders are still launching attractive deals onto the market, so anyone who is still debating on whether to fix may be wise to do so now. Those looking for peace of mind with their mortgage payments over the next few years may wish to consider a five-year or even 10-year fixed mortgage to protect them from future rate rises. Borrowers who are sitting on a standard variable revert rate could stand to save a significant sum on their repayments by switching to a fixed rate.

“Those borrowers who may be sitting on their standard variable rate (SVR) for a few months could have already seen an increase since the December base rate announcement, but in the months to come they could see it rise further still due to the latest rate rise decision. The difference between the average two-year fixed mortgage rate and SVR stands at 2.02%, and the cost savings to switch from 4.46% to 2.44% is a difference of £5,182 over two years* approximately. A rise of 0.25% on the current SVR of 4.46% would add £684* approximately onto monthly repayments over two years.

*Average standard variable rate (SVR) is currently 4.46%. 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:

“Mortgage rates are on the rise, and this base rate rise may come as disappointing news to borrowers who are not locked into a competitive rate. Lenders are still launching attractive deals onto the market, so anyone who is still debating on whether to fix may be wise to do so now. Those looking for peace of mind with their mortgage payments over the next few years may wish to consider a five-year or even 10-year fixed mortgage to protect them from future rate rises. Borrowers who are sitting on a standard variable revert rate could stand to save a significant sum on their repayments by switching to a fixed rate.

“Those borrowers who may be sitting on their standard variable rate (SVR) for a few months could have already seen an increase since the December base rate announcement, but in the months to come they could see it rise further still due to the latest rate rise decision. The difference between the average two-year fixed mortgage rate and SVR stands at 2.02%, and the cost savings to switch from 4.46% to 2.44% is a difference of £5,182 over two years* approximately. A rise of 0.25% on the current SVR of 4.46% would add £684* approximately onto monthly repayments over two years.

*Average standard variable rate (SVR) is currently 4.46%. Calculations based on a £200,000 mortgage over a 25-year term on a repayment basis.

 

Savings market analysis

Average savings rates

Aug-18

Dec-18

Feb-21

Dec-21

Jan-22

Feb-22

Easy access

0.53%

0.64%

0.17%

0.20%

0.20%

0.21%

Notice account

0.86%

1.07%

0.38%

0.54%

0.56%

0.53%

Easy access ISA

0.82%

0.94%

0.25%

0.26%

0.27%

0.26%

Notice ISA

0.98%

1.14%

0.40%

0.37%

0.37%

0.37%

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-18

Dec-18

Feb-21

Dec-21

Jan-22

Feb-22

Easy access

0.53%

0.64%

0.17%

0.20%

0.20%

0.21%

Notice account

0.86%

1.07%

0.38%

0.54%

0.56%

0.53%

Easy access ISA

0.82%

0.94%

0.25%

0.26%

0.27%

0.26%

Notice ISA

0.98%

1.14%

0.40%

0.37%

0.37%

0.37%

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:

“Savers may be pleased to see this latest base rate rise, but, in truth, it might not be passed on to them in full, or at all. As we have seen since the December rate rise, there are many variable rate savings accounts yet to benefit from the previous 0.15% rate rise, so savers would be wise to check their account and reconsider their loyalty if they have been left out. It could take a few months for this latest rise to be passed on, but should savers see 0.25% passed onto them, it would mean receiving £50 more a year in interest based on a £20,000 investment.

“Vigilance is crucial when it comes to grabbing a top rate deal, as there is no guarantee they will sit on the shelf for long. Challenger Banks and building societies are currently offering some of the best easy access accounts out there, whereas high street banks can pay as little as 0.01%. Shopping around is essential and even if a brand is unfamiliar, so long as they have the same protections in place as a high street bank, there is little reason to overlook them.”

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

“Savers may be pleased to see this latest base rate rise, but, in truth, it might not be passed on to them in full, or at all. As we have seen since the December rate rise, there are many variable rate savings accounts yet to benefit from the previous 0.15% rate rise, so savers would be wise to check their account and reconsider their loyalty if they have been left out. It could take a few months for this latest rise to be passed on, but should savers see 0.25% passed onto them, it would mean receiving £50 more a year in interest based on a £20,000 investment.

“Vigilance is crucial when it comes to grabbing a top rate deal, as there is no guarantee they will sit on the shelf for long. Challenger Banks and building societies are currently offering some of the best easy access accounts out there, whereas high street banks can pay as little as 0.01%. Shopping around is essential and even if a brand is unfamiliar, so long as they have the same protections in place as a high street bank, there is little reason to overlook them.”

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