Despite the Bank of England cutting its base rate to 4.5 per cent, mortgage rates are on the rise, according to new research from comparison site Finder.
Between October 2024 and March 2025, the base rate was cut twice by a total of 0.5 percentage points – a 10 per cent decrease from five per cent to 4.5 per cent. However, despite the base rate falling, mortgage rates have risen since October. The average rate on a two-year mortgage with a 25 per cent deposit has risen from 4.41 per cent in October to 4.54 per cent in March, peaking at 4.66 per cent in February. Similarly, the average five-year fixed rate mortgage on the same terms has jumped from 4.06 per cent to 4.32 per cent.
Savers have also been hit hard relative to the cuts. You might expect savings rates to drop a similar amount relative to the base rate change. This would mean the average variable cash ISA rate would also see a 10 per cent decrease from 2.58 per cent to 2.3 per cent.
In reality, the average variable cash ISA dropped by around a quarter, from 2.58 per cent to 1.96 per cent. This is more than double the rate of the base rate reduction, leaving savers significantly worse off.
Consumers in a lose – lose situation
Kate Steere, savings and mortgages expert at Finder, commented: “Homeowners could reasonably expect lower mortgage rates to follow base rate cuts, but instead, they’ve faced rising costs in recent months. At the same time, savers have seen average rates fall by far more than the base rate itself. The result? Consumers are losing out both ways.
“With Trump’s recent tariff announcement and subsequent reports of mortgage rates finally dropping, many will be hoping to see a reduction in their monthly payments after months of bad news. But this is too little, too late for some consumers – and how long will it actually last?
“Long-term predictions are hard to make given the turbulence in the global economy. The Bank of England has already warned about increased risks of high inflation, so the long-term future of mortgage rates remains very uncertain.
“For now, the best action consumers can take is to shop around and get the best savings or mortgage deal available. If your fixed deal is coming to an end, consider how long you may want to fix your rate for and the overall cost of the mortgage. Sometimes, a longer fixed-term will have a lower rate but will cost you more in the long run.”
