This month marks two years since the Bank of England made its first of 14 consecutive base rate rises. Moneyfactscompare.co.uk has analysed the average rates offered across savings and mortgages and how the markets have changed.
Mortgage market analysis
- Since the start of December 2021, the average two-year fixed rate has risen from 2.34% to 6.04% and the average five-year fixed rate has risen from 2.64% to 5.65%.
- On a 10-year fixed rate mortgage, the average rate has risen from 2.97% to 5.96% since December 2021.
- The average standard variable rate (SVR) stands at 8.19%, up from 4.40% in December 2021.
| Mortgage market analysis | ||||||
| Average mortgage rates | Dec-21 | Dec-22 | Jan-23 | Jun-23 | Nov-23 | Dec-23 |
| Standard variable rate (SVR) | 4.40% | 6.40% | 6.64% | 7.52% | 8.19% | 8.19% |
| Two-year fixed mortgage | 2.34% | 6.01% | 5.79% | 5.49% | 6.29% | 6.04% |
| Five-year fixed mortgage | 2.64% | 5.80% | 5.63% | 5.17% | 5.86% | 5.65% |
| 10-year fixed mortgage | 2.97% | 5.69% | 5.47% | 5.25% | 5.75% | 5.96% |
| Average rates shown are as at the first available day of the month, unless stated otherwise. Source: Moneyfactscompare.co.uk | ||||||
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:
“The past two years have proven to be an unprecedented period of interest rate volatility for mortgages. Those coming off a fixed rate deal and wishing to fix once more will likely have to cover a much higher mortgage repayment, with the average two-year fixed rate more than double what it was in December 2021. The lingering cost of living crisis could also be playing havoc with first-time buyers’ ability to get a foot on the property ladder, and affordable housing remains in short supply. Borrowers feeling the squeeze would be wise to seek help before they fall behind on their repayments and lenders will need to work closely with customers to support them moving into 2024.
“Borrowers hoping to lock into a fixed rate mortgage for peace of mind may be sitting on the fence as they wait for rates to fall further in the weeks ahead. However, any significant rate cut activity would typically be linked to a volatile swap rate market. The past few months have shown positive signs for mortgage pricing, so it is hoped that the fixed rate cut momentum continues into 2024. The incentive to switch from a variable rate is evident, with the average Standard Variable Rate (SVR) resting above 8%. A typical mortgage being charged the current average SVR of 8.19% would be paying around £275 more per month, compared to a typical two-year fixed rate (6.04%)*.
Average standard variable rate (SVR) is currently 8.19%. Calculations based on a £200,000 mortgage over a 25-year term on a repayment basis. SVR repayment £1,568 per month, versus £1,293 per month on 6.04% two-year fixed rate.
Savings market analysis
- Since the start of December 2021, the average easy access savings rate has risen from 0.20% to 3.18% and the average easy access ISA rate has risen from 0.26% to 3.31%.
- On a notice account, the average rate has risen from 0.54% to 4.44% since December 2021. The average rate on a notice ISA has seen similar growth, up from 0.37% to 4.25%
| Savings market analysis | ||||||
| Average savings rates | Dec-21 | Dec-22 | Jan-23 | Jun-23 | Nov-23 | Dec-23 |
| Easy access | 0.20% | 1.44% | 1.56% | 2.21% | 3.19% | 3.18% |
| Notice account | 0.54% | 2.31% | 2.43% | 3.18% | 4.31% | 4.44% |
| Easy access ISA | 0.26% | 1.55% | 1.66% | 2.35% | 3.29% | 3.31% |
| Notice ISA | 0.37% | 2.19% | 2.36% | 3.08% | 4.12% | 4.25% |
| Averages based on £10,000 gross rate. Average rates shown are as at the first available day of the month, unless stated otherwise. Source: Moneyfactscompare.co.uk | ||||||
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:
“The interest rate volatility within the savings market has been evident over the past two years. This year has had its ups and downs, but overall, 2023 has provided much better returns for savers. The Bank of England base rate rises played their part by encouraging providers to boost the variable rates on offer to savers, and many challenger banks and building societies have worked hard to provide better rates for customers. However, it has not been all positive news, as some customers are still not being rewarded for their loyalty. Despite the average easy access rate returning above 3%, there are still a few high street banks paying meagre returns, less than 2% in some cases. It will be up to customers to monitor their savings rates and switch if they think they’re getting a poor return, both now, and moving into 2024.
“One area of the savings market to get some encouraging attention has been Cash ISAs. Not only have interest rates been on the rise, but the recent Autumn Statement revealed some positive changes for savers who want to maximise using their ISA allowance and the different types of ISAs on offer. Those savers who have larger savings pots sitting outside of an ISA would be wise to review their Personal Savings Allowance and digest the new changes coming into place on ISAs to see if they will be of benefit. In the meantime, there is no absolute answer on whether the variable rate market will be blessed by more rate rises, but there is hope that challenger banks will be ready to compete for business to fund their future lending, boosting rates for savers.”
