Costs have dropped across SVRs and fixed rates over the past year
With the Bank of England anticipated to lower its base rate today, analysis from price comparison website Moneyfacts shows that while mortgage borrowers are set to benefit from reduced costs, savers may face further declines in returns.
At the beginning of August 2024, the base rate was set at 5%, following three consecutive 0.25% reductions over the past year. These changes have brought the average standard variable rate (SVR) down by 0.74 percentage points to 7.42%, compared to 8.16% a year earlier.
The average two-year fixed mortgage rate has dropped from 5.77% to 5% since August 2024, while the five-year fixed rate has decreased to 5.01%. Ten-year fixed rates have seen a decline from 5.93% to 5.60% over the same period. The Moneyfacts Average Mortgage Rate now stands at 5.04%, down from 5.65% in August 2024 and 6.52% in August 2023.
“The continuation of falling mortgage rates will instil a sense of confidence among borrowers, with the Moneyfacts Average Mortgage Rate dropping by 0.41% over the past six months and down by 0.61% year-on-year,” said Rachel Springall (pictured right), finance expert at Moneyfactscompare.co.uk. “Lenders have also been relaxing stress tests to further support mortgage customers, but it is worth pointing out that fixed rates can move outside of base rate cuts.
“The unsteadiness of swap rates last month was a forewarning for lenders not to get too carried away with fixed rate mortgage cuts, which is why the margins of cuts by lenders were mixed. In positive news, swap rates have been edging downwards once again in recent days, which will give lenders more scope to reduce fixed mortgage rates.
“This movement, coupled with expectations from economists for more cuts to the Bank of England base rate before the year is over, spells good news for millions of borrowers who need to refinance.”
But while borrowers have benefited from lower interest rates, savers have seen their returns diminish. Since August 2024, the average easy access savings rate has dropped from 3.15%, and the average easy access ISA rate has also declined from 3.36%. Notice account rates have fallen from 4.29%, and notice ISA rates from 4.22%.
As of July 2025, the average easy access savings rate edged up slightly from 2.67% to 2.68%, while the average easy access ISA rate slipped from 2.93% to 2.90%. Notice account rates and notice ISA rates have remained largely unchanged in recent months. The Moneyfacts Average Savings Rate now stands at 3.50%, down from 3.92% in August 2024 and 4.14% in August 2023.
“Savings rates are getting worse and any base rate reductions will spell further misery for savers,” Springall said. “The Moneyfacts Average Savings Rate of 3.50% has dropped by 0.42% year-on-year, and is expected to fall further if the predictions from economists for further base rate cuts materialise.
“It is essential that savers do not wait around for too long to snap up the top rates on the market, particularly if they use their pots to supplement their monthly income.”
Two-year fixed mortgage rates fall below five-year deals
Springall noted that the average two-year fixed mortgage rate has dropped below its five-year counterpart for the first time since September 2022.
“Millions of borrowers coming off a fixed rate deal this year will be delighted to see fixed mortgage rates on the downward trend, with the average two-year fixed rate dipping below its five-year counterpart for the first time since September 2022,” Springall said.
“Back then, mortgage rates started to rise dramatically, in the aftermath of the ‘mini-Budget’ and it caused mass panic for those struggling to buy their first home. Thankfully, time is a healer, with lower rates, much more market stability and a relaxation in stress testing, mortgage prisoners might now be free to refinance.
“The end of the inversion in the two- and five-year fixed rates, if sustained moving onward, will bring borrowers back to a more traditional mortgage market, where it’s more expensive to secure a longer-term fixed mortgage. Lenders will no doubt be keeping a close eye on swap rates and react quickly should the path change in the coming weeks. This may well be the time for borrowers to act quickly to secure a deal, so it’s wise for them to seek advice to navigate the mortgage maze.”
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