BANKS and building societies have increased mortgage and savings rates after the Bank of England hiked interest rates.
The central bank raised rates from 3.5% to 4% on Thursday heaping further pressure on households.
It is hoped the rise will help to bring down high inflation.
The base rate is typically used by banks to help them decide what interest rate to charge borrowers, and also what to pay to savers.
This means that people taking out a mortgage will have to pay more interest on their loans.
If you have a tracker mortgage – the type that directly follows the base rate – you can expect your interest payments to jump pretty soon, if they haven't already.
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Standard variable rate (SVR) mortgages, could also be impacted straight away.
If you have a fixed-term mortgage, you will not start paying more interest until you have to remortgage when your current deal runs out.
In December, following the BoE's hike, not all banks raised their mortgage rates.
This is because a lot of the rate rises were already priced in, based on previous predictions.
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Fixed-rate mortgage rates have already started coming down since last year when markets feared interest rates would climb above 6%.
We list the major banks and building societies that have increased their rates following yesterday's announcement.
Barclays
Barclays will be increasing the rate of its Resident SVR from 6.99% to 7.49% on March 1.
The lender will also be hiking the rate on its buy-to-let (BTL) SVR from 7.99% to 8.49% on the same date.
It said both mortgages now track the Bank of England base rate, so whenever the rate goes up or down, customers will see their interest rate change accordingly.
Barclays said it is currently reviewing its rates for customers who borrow and save with it.
We will update this article as soon as we know more.
Natwest
Natwest told The Sun there have been no changes to any of its current rates since yesterday's announcement.
Lloyds Bank
Lloyds Bank told The Sun its rates remain under review.
We'll add this information as soon as the change is announced.
Nationwide
Nationwide said it is looking through what the latest BoE rate change means for borrowers and savers.
But it said mortgage rates on tracker mortgages held by existing members will automatically increase based on the rate rise from March 1.
The Sun has asked Nationwide exactly how much it expects rates to rise for these customers.
HSBC
HBSC said that aside from its tracker mortgages, there has been no immediate change to its other mortgage rates.
But the bank did increase rates on four of its savings products yesterday.
The interest rate of a Premier Savings account with HSBC has increased from 0.65% to 1.2%, while a Flexible Saver has gone from 0.65% to 0.9%.
If you have an Online Bonus saver, you could now earn 0.9% interest – an increase of 0.25% from 0.65%.
Wannabe homeowners with a Help to Buy Isa holding more than £12,000 can expect to gain 0.9% in interest.
Santander
Santander and Alliance and Leicester SRVS will increase by 0.5% to 7.25% on March 1.
Tracker mortgage products linked to the base rate will also increase by 0.5% from the beginning of March 2023.
This includes the Santander Follow-on Rate (FoR) which will increase to 7.25%.
Santander said its savings products that are linked to the Bank of England base rate will increase by 0.5%, effective from March 2.
The products linked to the base rate are the Rate for Life and Good for Life savings accounts.
Santander increased rates that aren’t linked to the base rate, including on accounts paying 0.55% to 0.60% on February 21.
These included its Everyday Saver, Instant Saver, ISA Saver and Easy ISA accounts.
Coventry Building Society
Coventry Building Society said it is currently reviewing all of its variable savings and mortgage rates.
But mortgages that track the base rate will automatically increase from March 1.
Matthew Carter, head of savings and mortgages at the building society said: “Having increased rates eight times in the last year, we are already paying highly competitive rates to savers.
“We’ll contact our members if there will be any changes to their savings account or mortgage.”
How much could my mortgage go up by?
The 0.5% hike today will add £52 a month to mortgage bills for those not on a fixed deal, according to TotallyMoney.
That's based on the average UK property costing £270,708 with a 75% loan-to-value and a mortgage with a 25-year term.
Fixed-rate mortgage rates soared above 6% following the government's mini-budget in September.
The average fixed two-year mortgage rate peaked at 6.65% on October 20 – up from 2.25% in the previous year,according to Moneyfacts.
Meanwhile, the average fixed five-year deal peaked at 6.51% – up from 2.55% in the previous year.
Now, the average fixed two-year mortgage rate is 5.44% while the average fixed five-year mortgage deal stands at 5.20%.
In December, the Bank of England warned millions of households could face £3,000 a year hike on their mortgage repayments by the end of 2023 with a 3.5% interest rate rise.
With the base rate climbing to 4%, this figure may rise higher.
I'm a saver – what do these rates mean for me?
The hike is likely to be good news for savers as banks battle it out to offer market-leading interest rates.
A rate rise is generally good news for savers, especially after a long stretch of getting very low rates on their money.
But, bear in mind high inflation can erode away the value of any savings you have.
So if you have £100 in the bank this year and inflation is 10.5%, the real spending power of that money is reduced to £89.50.
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The base rate rise could see banks pass on higher rates to savers – though they are usually much slower to act than with passing on higher rates for borrowing.
In fact, MPs are set to question the banking giants on savings rates next week.
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