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Average mortgage rates tick up but savings rates decline

Average mortgage rates tick up but savings rates decline
Anna Sagar
Written By:
Anna Sagar
Posted:
10/05/2024
Updated:
10/05/2024

The average two-, five- and 10-year fixed rates have risen month-on-month, but are lower than they were six months ago, while there is little change to savings rates, a report has found.

Since November 2023, the average two-year fixed rate mortgage has decreased from 6.29% to 5.91%, and the average five-year fixed rate has fallen from 5.86% to 5.48%.

However, according to the data from Moneyfacts, average rates have risen from 5.8% and 5.39% respectively just in the last month.

For a 10-year fixed rate mortgage, the average rate has jumped from 5.75% to 5.97% since November 2023. The rate has increased from 5.77% since the start of April 2024.

The average standard variable rate (SVR) currently stands at 8.18%, a fall from 8.19% in November 2023, though there’s no change in the past month.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Borrowers may be disappointed to see fixed mortgage rates are on the rise. As has been the case since October 2022, the average five-year fixed mortgage rate remains below its two-year counterpart, which edges ever closer to 6%, not seen since December 2023.

“Lenders have been busy reviewing their fixed rate pricing in response to volatile swap rates, seeing month-on-month rises. However, fixed rates are lower than they were six months ago, so consumers who are now coming off a two- or five-year fixed mortgage would be wise to act quickly to grab a competitive deal, particularly as some lenders have withdrawn deals priced below 5%.”

Springall added that the mortgage market “continues to be fluid” despite no change to the Bank of England base rate since August 2023, and the expectation is that rate cuts will be delayed due to “stubborn inflation”.

‘Persistent lack of affordable housing’

She added that affordability continues to pose a challenge to buyers due to interest rates being higher than they may have expected this year, but also the persistent lack of affordable housing.

“This is having a notable impact on first-time buyers, who may have exhausted all their savings to raise a substantial deposit, and do not have the Bank of Mum and Dad to help them buy their first home.

“Those borrowers looking to remortgage may also face much higher repayments when they come off their deal, but they would still pay less with a fixed mortgage than on a revert rate, based on average rates. The average SVR stands above 8%, so it’s much higher than the average two-year fixed rate.”

She said that a typical mortgage being charged the current average SVR of 8.18% would be paying around £290 more per month, compared to a typical two-year fixed rate of 5.91%.

“Borrowers concerned about grabbing a new deal would be wise to seek advice from an independent broker, and any existing customers should speak to their lender if they are struggling with repayments,” Springall noted.

Little change to savings rates

Turning to savings rates, Moneyfacts revealed that since the start of November 2023, the average easy-access savings rate has fallen from 3.19% to 3.11%, while the average easy-access ISA rate has risen from 3.29% to 3.33%.

The average easy-access rate has remained unchanged since April this year, but the average easy-access ISA rate decreased month-on-month from 3.38%.

When it comes to notice accounts, the average rate has decreased from 4.31% to 4.27% since November 2023. Again on ISAs, the average rate on a notice ISA increased from 4.12% to 4.17%, rising from 4.16% since the start of April 2024.

The finance expert said: ““Savers will find variable rates have remained rather robust over the past six months, but there have been cuts made to easy-access accounts. They remain a firm favourite with savers, and there is hope that the market will stay resilient over the next few weeks, as expectations of an imminent base rate cut have waned.

“Challenger banks and building societies continue to offer the top easy-access rates, so savers would be wise to review their account and switch if their loyalty is not being rewarded. One area of the market to thrive over recent months has been cash ISAs; easy-access returns have fallen recently, but unlike accounts outside of an ISA wrapper, they are higher than they were six months ago.

“A positive ISA season has been the key to improving accounts for savers this year, ideal for those looking to protect their cash from tax.”