You are here: Home - Mortgages - Remortgage - News -

Mortgage rates go up this month but savers still snubbed

0
Written by:
03/09/2018
If you’re on a variable rate deal, it’s likely you’ll be paying more for your mortgage from this month.

Banks started to announce hikes to their variable mortgage rates in the hours after the Bank of England base rate went up from 0.5% to 0.75% on 2 August.

A handful of providers, including HSBC and RBS, increased their base rate tracker mortgage rates by 0.25% immediately, while other brands such as Lloyds, Halifax, Santander and TSB said rates would change from 1 September.

Most standard variable rate (SVR) customers will also be worse off as 60% of providers have increased their SVR since the Bank rate rise, and more are expected to follow, according to data firm Moneyfacts.

Only two providers – Bath Building Society and Principality Building Society – passed on less than the 0.25% rise and only Yorkshire Building Society has said it won’t be increasing its SVR at all.

Savers overlooked

On the savings side, most of the biggest brands have failed to pass on the 0.25% rise to their easy access accounts, with the average rate rising by just 0.06% since last month, Moneyfacts said.

Not a single high street bank matches the Bank’s base rate of 0.75% for new easy access customers and less than a third of the overall market can beat its level.

Some providers have been fairer to savers – Sainsbury’s Bank, Beverley Building Society and Vernon Building Society have all passed on the full rise to easy access accounts – but they are in the minority.

If providers have hiked savings rates, most increases have been small. Barclays, for example, has boosted the rate on its Everyday Saver account by just 0.05% from this month.

What should borrowers do?

The message for borrowers sitting on a SVR is to consider remortgaging and opting for a fixed deal.

Moneyfacts finance expert, Charlotte Nelson, said: “Many providers had already priced the rate rise into their fixed rate mortgages in the lead up to the announcement, as they are aware that a rate rise causes many borrowers to reassess their deal. Therefore, lenders have held off from increasing rates further in a bid to attract these borrowers who are now considering remortgaging away from their SVR.

“Any borrower who is sitting on their SVR should do just that, as they could save £250.35 (based on a £200,000 mortgage) a month or £3,004.20 a year by simply switching from the average SVR (4.84%) to the average two-year fixed rate (2.53%).

“The ball is now rolling for base rate rises, with at least a quarter-point rise expected in the foreseeable future. Borrowers now shouldn’t rest on their laurels and should opt for a fixed deal to protect themselves against any future rate rises.”

What should savers do?

The average easy access rate is 0.59% but the best deals can be found with the more unfamiliar brands. Birmingham Midshires offers 1.35%, Bank of Cyprus UK pays 1.34% and RCI Bank offers 1.30%.

“Savers should take time out to study the best buy tables and switch if they are getting a raw deal,” says Moneyfacts’ Rachel Springall.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week