Derin Clark

Derin Clark

Online Reporter
Published: 04/11/2019

Mortgage borrowers continue to benefit from low rates while savers face a challenging time finding good returns, month-on-month data reveals.

Analysing month-on-month data, Moneyfacts.co.uk has found that competition within the mortgage market remained strong, with two-year fixed mortgage rates remaining relatively static, falling by 0.01% to 2.44%, while the average three and five-year fixed rate remained unchanged at 2.60% and 2.75% respectively. The average 10-year fixed rate is the biggest mover, decreasing by 0.07% from 2.98% to 2.91%.

While it has been good news for mortgage borrowers, savers continue to face a challenging market. In fact, the data shows that average rates on fixed savings accounts have reduced at a steeper curve than mortgage rates, with the average two-year bond rate falling by 0.05% to 1.36% and the average five-year rate dropping by 0.11% to 1.77% over the past month.

Mortgage fixed rate analysis 

Mortgages Two year fixed Three year fixed Five year fixed Ten year fixed
Six months ago 2.47% 2.66% 2.85% 3.00%
Last month 2.45% 2.60% 2.75% 2.98%
Today 2.44% 2.60% 2.75% 2.91%

 

Savings fixed rate analysis (£10,000 investment tier)

Savings One year fixed Two year fixed Three year fixed Five year fixed
Six months ago 1.46% 1.63% 1.84% 2.15%
Last month 1.31% 1.41% 1.56% 1.88%
Today 1.29% 1.36% 1.51% 1.77%

Darren Cook, finance expert at Moneyfacts.co.uk, said: “It appears that fixed mortgage rates are continuing to be cut despite the rise in interest rate SWAPs, a market that lenders generally use to hedge themselves against future interest rate fluctuations. The significant increase in SWAP rates indicates that markets may now be clawing back a previous factoring of a forecasted Bank base rate cut in the short term.

“The current average two-year fixed rate is currently 2.44%, however, this average rate reached its historical low of 2.20% two years ago in October 2017, so the current drive by some mortgage providers to cut rates could be a conscious strategy to make sure that they retain the borrowers who may be maturing from a very low fixed rate secured two years ago.

“Savers – especially those who may be reliant on interest to support their income – have had a torrid time in trying to find a savings account with suitable returns. The average one-year bond rate has fallen by 0.17% to 1.29% and the average two-year bond rate has fallen by 0.27% to 1.36% over the past six months.

“It may be the case that during economic uncertainty, some investors who generally favour longer-term riskier investments could be holding back on decisions and depositing larger sums of money in near-cash savings options for the shorter term. Providers may have no alternative but to start turning off their cash deposit tap by reducing savings rates or even withdrawing popular higher interest paying savings accounts altogether.”   

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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