20 Apr 2024

Two years at 0.50%

Bank base rate has now been at an all time low of 0.50% for two years.

Borrowing

Two years ago the average deposit needed for a mortgage was 40%, thankfully it is now around 25% as mortgage availability has increased.

Unfortunately for customers the cost of borrowing on credit cards, loans and overdrafts has continued to rise even though base rate has stayed at a record low.

	March 2009	Today	Change
Number of mortgages	1,452	2,492	+1,040
Number of mortgages (90% LTV)	89	202	+113
Number of mortgages (85% LTV)	169	535	+366
Number of mortgages (75% LTV)	487	828	+341
Number of mortgages (60% LTV)	297	285	-12
Average 2 year fixed rate	4.79%	4.58%	-0.21%
Average 5 year fixed rate	5.62%	5.68%	+0.06%
Average 2 year tracker rate	3.54%	3.40%	-0.14%
Average mortgage fee	£1,181	£963	-£218
Average credit card rate	17.7%	18.9%	+1.2%
Average loan rate (£5,000)	12.1%	12.5%	+0.40%
Average authorised overdraft rate	13.61%	14.84%	+1.23%
Source: Moneyfacts.co.uk 10.3.11

Michelle Slade, spokesperson for Moneyfacts.co.uk, commented:

“During the last two years lenders have significantly increased the availability of mortgages. Encouragingly many of the best deals are available to borrowers with a 25% deposit, while those with smaller deposits are also seeing real choices.

“Fixed mortgage rates have been on a roller coaster ride over the last two years, steadily falling to a seven year low in June 2010 before rising markedly in recent months as a base rate rise appears more imminent.

“By contrast, tracker rates remained reasonably steady during the same period before falling in the last month to a current all time low.

“When household budgets are stretched as now, people often turn to credit cards and overdrafts to get by.

“It is often the case that in real hardship, unsecured lending, such as credit cards, are the first thing people stop paying, which is why this form of borrowing continues to rise as lenders pass on the increased risk to customers.
Saving

Savers have had a torrid time in the last few years, but increased demand for their money has meant savings rates are beginning to steadily rise.

	March 2009	Today	Change
Average easy access	0.83%	0.84%	+0.01%
Average notice	1.09%	1.15%	+0.06%
Average Cash ISA	1.99%	2.47%	+0.48%
Average 1 year bond	2.78%	2.74%	-0.04%
Average 2 year bond	2.83%	3.34%	+0.51%
Average 3 year bond	2.98%	3.68%	+0.70%
Average 4 year bond	2.89%	3.91%	+1.02%
Average 5 year bond	2.86%	4.13%	+1.27%
Source: Moneyfacts.co.uk 10.3.11

Michelle Slade, spokesperson for Moneyfacts.co.uk, commented:

“Increased demand for savers’ money has meant that despite no change in bank base rate savings rates have continued to rise.

“New regulation requiring providers to hold higher levels of cash deposits and increased use of in-house funding for mortgages rather than using the money markets have increased the demand for savers’ money.

“Longer term fixed rate bonds have seen the biggest increases in rates as providers can ensure the period of time they have savers money for.

“Cash ISA rates now stand at their highest level for more than two years and are likely to rise further in the coming months as the ISA season gets into full swing.

“Although savings rates may appear low when compared to previous years, providers are paying higher interest rates on savings accounts than would normally be expected with such a low base rate.

“It is likely that when bank base rate does finally rise, some providers may opt not to pass the full rate rise on in order to reduce this margin.”

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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