Mortgage deals remain attractive despite base rate decision

New data from the Bank of England (BoE) has revealed that mortgage lending soared to a nine-year high of £69.6 billion in the three months to September.

Year-on-year, overall activity was up by 14 per cent, as homebuyers and homeowners moved to take advantage of ultra-low interest rates ahead of a predicted base rate hike.

However, since the BoE raised its base rate from 0.25 to 0.5 per cent at the beginning of November, separate data suggests that low mortgage rates have actually come through relatively unscathed.

A report in The Telegraph suggests that average mortgage costs have “barely moved” since the Bank decided to increase interest rates for the first time in more than a decade.

Citing research from, the newspaper reports that the average two-year fixed mortgage rate has gone up by just 0.03 per cent since the BoE’s historic decision.

In September and October, such deals were on offer at an average rate of 2.31 per cent. In November and December, the average rate appears to have risen to just 2.34 per cent, Moneyfacts’ research reveals.

Meanwhile, the average standard variable rate (SVR) deal has risen by only 0.14 per cent, despite the fact that such deals are dictated directly by fluctuations in the BoE’s base rate.

The figures suggest that so far, banks have only passed on part of the base rate increase to borrowers.

Charlotte Nelson, of, said: “Just 56 per cent of [mortgage] providers have passed on a rise to their SVR, with seven of them choosing to increase their rates by less than the 0.25pc, which has caused the average SVR to rise more modestly.

“Borrowers may feel they are getting a reprieve from the full effects of the base rate rise, but when the highest SVR is currently priced at 6.08pc, it may be little consolation to know that some SVRs have not seen a rate rise.”

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Nigel is the firm’s Managing Partner and joint Head of Litigation and Dispute Resolution at Mackrell Turner Garrett’s London office. He is widely experienced in complex litigation matters, and various forms of dispute resolution.