Greedy? Banks hike mortgage rates but delay savings account rise

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Shaun Church, director at mortgage broker Private Finance, recommended that homeowners with a fixed-rate mortgage look to extend terms of their loan. Other than the banks and loan sharks, who actually benefits from this rise?

The rate for a 15-year fixed home loan is now 3.05 percent, and the rate for a 5-1 adjustable-rate mortgage (ARM) is 3.16 percent.

Accord Mortgages will align its SVR to the rest of the Yorkshire Building Society group, whom it is owned by.

He said: "Banks did pass on the cut to their depositors and we expect competition to push it in the opposite direction".

Media captionWe challenged some ten year olds to explain a system that baffles many adults...

In the U.S. on Wednesday, the USA the Federal Reserve, as expected, kept interest rates unchanged.

The average house price across the Black Country boroughs of Dudley, Walsall, Sandwell and the city of Wolverhampton varies between around £140,000 and £170,000, rising over £200,000 in Staffordshire.

"While it's the first rate rise in over a decade, it is only taking the rate back to the level seen in August 2016 and at 0.5 per cent it remains near rock bottom". Surely it contributes to that very thing?

How will it affect you if you have a variable mortgage?

"The central bank didn't stop there, piling on the dovishness by stating that "uncertainties associated with Brexit are weighing on domestic activity", leaving the United Kingdom economy to struggle while global growth rises "significantly".

But if you have got a fixed rate mortgage, the interest will stay the same until the mortgage ends and you have to remortgage.

"Clients on a variable rate will of course be affected".

"In a comment that far overshadowed the rate hike itself, the Bank claimed that any future increases would be at a "gradual pace and to a limited extent".

It is pencilling in growth of 1.7% for 2020.

While a fair number are on five- and 10-year deals, two-year fixes are by far the most popular mortgage deals - and it's not hard to see why. But it's not impossible.

The data reports that borrowers who have opted for fixed rates amounted to 28.23 per cent, a figure that has remained relatively stable for the past few months. The biggest factor is what happens to inflation.

The interest rate hike is less relevant to the prime market, however, since luxury buyers tend to pay all cash.

Monthly payments on a 15-year fixed refinance at that rate will cost around $697 per $100,000 borrowed.

In short, the savings rates they offer are driven by competitive pressures rather than tied to the Bank of England rate.

Savers have suffered nearly a decade of low returns as rates were slashed to combat the financial crisis - and will now celebrate today's rate rise.

Estimated profits at the 24 biggest banks and building societies will rise by 3.1% over the next year as the rate rise is passed on, according to analysis by consultancy Simon-Kucher.

To see where Bankrate's panel of experts expect rates to go from here, check out our Rate Trend Index.