One week on and the base rate affect has barely started

Lisa Taylor, analyst at Moneyfacts.co.uk, comments: “The latest base rate rise was almost a foregone conclusion; the only uncertainty was whether the rise would be a half or quarter percent. With consumers already having to contend with a 0.75% increase in the last nine months, the 0.25% will definitely be easier to swallow.

Savings

Unlike the January rate increase which came out of the blue, providers have been able to plan for this latest rise. But still the savings market has been traditionally slow to react, with only 42 savings providers announcing changes to some or all of their savings range, and so far only 24 have applied the higher rates to their whole product range.

“As expected the first accounts to move are those directly linked to base rate, so any account which either tracks base or has a rate guarantee. Unusually a handful of building societies have been quick off the mark in announcing their changes, which usually filter through around the start of the next month once they have completed their board discussions.

“The fact that almost every company so far has passed on the full quarter point rise is a sign of the competitive nature of the savings market. But with over 80% of providers yet to make an announcement on their full range, consumers should perhaps wait a while before shopping around for a new savings account.

“While Anglo Irish Bank has only opted for a 0.20% rise, it must be noted that only a month ago they increased their rates by 0.10%. And both their Easy Access Deposit account and 7 Day Notice both pay market leading rates.

Mortgages

“Similarly mortgage lenders have been slow to amend their SVR rates, with almost 100 still to announce. Unsurprisingly all bar three of the increases have been for the full 0.25%, with only Scottish BS opting for a smaller rise of 0.20%.

“The exceptions are Intelligent Finance, which opted for a 0.45% rise and Standard Life Bank which increased by 0.30%. Although the Intelligent Finance increase may appear high, its product range is not linked to their SVR, so the only borrowers who will face this increase will be those paying the SVR as a revert-to rate after their deal expired. While the 0.30% rise from Standard Life Bank will impact not only on their reverts to SVR, but their full variable rate range too.

“The list also includes several of the largest mortgage lenders, including Nationwide BS and Halifax, whose SVRs stand at 6.99% and 7.50% 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.”