One week on from the Base Rate increase –Moneyfacts.co.uk reviews the Savings and Mortgage rate changes announced so far.
Lisa Taylor, analyst at moneyfacts.co.uk comments:
“With only three months since the previous base rate increase, the dust has barely settled in the world of mortgages and savings, and now it’s all change once again. Consumers have probably only made a couple of mortgage repayments at the increased rate following the August rise and now must brace themselves to pay out even more.
“Many of those customers who are on variable rate mortgages must be dreading the next couple of months, with the combination of a 0.50% increase in mortgage rates, the cost of Christmas and the inflated winter utility bills soon to hit the doormat.
“The base rate rise last week was no real shock, and the MPC was probably hoping that consumers would have seen this coming and hopefully tightened their budgets accordingly. Also, as the rate was widely anticipated, it leaves little excuse for providers not to amend their rates sooner rather than later.
“So what changes have we seen one week after the November 9 rate rise?
Mortgages
“Since last Thursday, 29 direct mortgage providers have increased their standard variable rates. All rates have been increased by the full quarter point, with the exception of Bath BS and Portman BS, which have opted for a 0.24% rise, keeping their SVR just below the 7% mark and Bank of Scotland which has increased by 0.35%. The latter increase may appear excessive, but currently Bank of Scotland are only offering a few specialist discount products linked to SVR. That said, it will have an impact on their customers sitting on previous SVR products, and this increase should act as a wake up call to get them to look at finding a more competitive deal.
“The list also includes two of the larger mortgage lenders, Nationwide BS and Halifax, whose SVRs stand at 6.49% and 7% respectively. With these early announcements, often seen as the benchmark within the industry, it shouldn’t be too long before we see more lenders following their lead.
“While there have been more lenders amending their rates within the first week compared with the August rise, we would have expected a slightly faster response, with lenders able to plan for this latest adjustment, as well as it being in their own financial interest to raise borrowing rates at the earliest opportunity.
“For those consumers still paying their lender’s standard variable rate, and many now hitting 7%, this latest rise may spur them to search the market for a better deal. Still, many fixed and variable rates are available around 5%, so for an average mortgage of £150K, a monthly saving of over £180 can be obtained.
Savings
“In total 31 onshore savings providers have made increases to some or all of their savings range, and pleasingly the majority have passed on the full quarter point increase to the consumer with almost immediate effect.
“However, of those which have announced an increased to their mortgage rate, only the Halifax, Heritable Bank and West Bromwich BS have so far also announced a rise in their savings range. While some providers may not hold a savings range, others may have been keener to pass the rise to their mortgage customers in advance of giving their savers more interest. However, with several mortgage increases not effective till the start of December, it will take time to see the full effect of this time lag, if in fact one emerges at all.
“With 75% of the savings market and 80% of the mortgage lenders yet to announce, the next few weeks will be very interesting to watch. It will certainly be a good few weeks before all of the increases have filtered through, and the consumer sees the impact.
NOTES TO EDITORS:
Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.
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