BORROWERS are still winning the interest rate war while savers are losing it, with banks cutting mortgage rates at the same time as failing to lift savings rates.
Indeed, the average cost of a fixed-rate mortgage has fallen for the first time in 12 months, despite the base rate increasing from 0.5 per cent to 0.75% in August.
The average two-year rate dropped from 2.53% in September to 2.49% in October.
Charlotte Nelson at Moneyfacts noted that while this is counterintuitive, it is a sign that providers are using rates to try to attract customers to their mortgage products.
“Many would have assumed that the average rate would have increased in the aftermath of the base rate rise this August, however the opposite seems to be the case,” she said.
“Providers have started to reignite competition in the market to attract remortgage customers and retain their mortgage books.”