The levels of interest rates dropping for savers nosedived by 2.4 times the pace at which the base rate reached 4.5%, a study by Finder shows.
While the returns for some savers slowed, mortgage rates crept up.
The average two-year mortgage with a 25% deposit rose from 4.41% in October to 4.54% in March.
The five-year equivalent leapt from 4.06% to 4.32% at the same time. Today (23 April), a five-year fix is 5.12% on average, with the average two-year fix for homeowners priced at 5.22%.
In that time, the Monetary Policy Committee (MPC) voted to cut the base rate from 5% to 4.5%, with more reductions mooted for this year. In March, the committee opted to hold the rate in a bid to battle the pressures of rising inflation.
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“Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further”, the MPC noted.
Considering the level of cuts made to the base rate, the average cash ISA ought to have dropped from 2.58% in October to 2.3%, according to Finder – which is a 10% reduction.
However, the average cash ISA rate instead plummeted by 25% to 1.96%.
Pace of rate changes
| Month | Base rate | Two-year fixed mortgage | Five-year fixed mortgage | Cash ISA (variable) |
| October 2024 | 5% | 4.41% | 4.06% | 2.58% |
| November 2024 | 4.75% | 4.53% | 4.29% | 2.11% |
| December 2024 | 4.75% | 4.6% | 4.37% | 1.84% |
| January 2025 | 4.75% | 4.64% | 4.38% | 1.85% |
| February 2025 | 4.5% | 4.66% | 4.39% | 1.82% |
| March 2025 | 4.5% | 4.54% | 4.32% | 1.96% |
‘Too little, too late’
Kate Steere, savings and mortgages expert at Finder, said: “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?”
Steere added: “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.”
