Average mortgage rates climb despite base rate cuts, while savings rates drop at more than double the pace

Homeowners have seen average mortgage rates rise since October, despite the Bank of England cutting the base rate. However, savers have seen average rates slashed at 2.4 times the pace of the base rate cuts.

New research by the finance comparison site Finder reveals the stark difference between savings and mortgage rates following recent changes to the Bank of England base rate. 

Between October 2024 and March 2025, the base rate was cut twice by a total of 0.5 percentage points – a 10% decrease from 5% to 4.5%. 

However, despite the base rate falling, mortgage rates have actually risen since October. The average rate on a 2-year mortgage with a 25% deposit has risen from 4.41% in October to 4.54% in March, peaking at 4.66% in February. Similarly, the average 5-year fixed rate mortgage on the same terms has jumped from 4.06% to 4.32%.

Savings rates slashed more than twice as much relative to base rate cuts

Savers have also been hit hard relative to the cuts. You might expect savings rates to drop a similar amount relative to the base rate change. This would mean the average variable cash ISA rate would also see a 10% decrease from 2.58% to 2.3%.

In reality, the average variable cash ISA dropped by around a quarter, from 2.58% to 1.96%. This is more than double the rate of the base rate reduction, leaving savers significantly worse off.

Kate Steere, savings and mortgages expert at Finder, commented: 

“Homeowners could reasonably expect lower mortgage rates to follow base rate cuts, but instead, they’ve faced rising costs in recent months. At the same time, savers have seen average rates fall by far more than the base rate itself. The result? Consumers are losing out both ways.

“With Trump’s recent tariff announcement and subsequent reports of mortgage rates finally dropping, many will be hoping to see a reduction in their monthly payments after months of bad news. But this is too little, too late for some consumers – and how long will it actually last?

Long-term predictions are hard to make given the turbulence in the global economy. The Bank of England has already warned about increased risks of high inflation, so the long-term future of mortgage rates remains very uncertain.”

“For now, the best action consumers can take is to shop around and get the best savings or mortgage deal available. If your fixed deal is coming to an end, consider how long you may want to fix your rate for and the overall cost of the mortgage. Sometimes, a longer fixed-term will have a lower rate but will cost you more in the long run.”