"As rumours start to build about a second reduction to base rate and mortgages are falling to record lows yet again, borrowers and providers alike are questioning how low these deals will actually go."
The Moneyfacts data shows that between the 1st of August and 1st of September, the average SVR has dropped from 4.80% to 4.71%, but says that many providers pre-empted the announcement and increased rates to offset the cut.
Charlotte Nelson, Finance Expert at Moneyfacts, has described the post-rate cut market as "a mixed bag", stating that "with fixed rates at all time lows, borrowers sitting on their SVR would still be better off opting for a fixed rate".
Borrowers would be £243.03 a month better off based on the average two-year fixed rate at 2.46% compared to the average SVR of 4.71%.
Charlotte Nelson commented: “Given the bumpy road ahead for the economy, some providers are still quite cautious in their reaction to this new turn of events, with many choosing to wait and see to ensure they get the timing right.
“The average two-year tracker rate has been reduced by 0.19%, so borrowers looking for this type of deal would have seen a better picture. However, shockingly some providers, preempting the announcement, chose to increase their variable rate products, meaning the reductions have been offset. To illustrate this, at the start of July the average two-year variable tracker rate stood at 2.01%. This had increased by 0.12% on 1st August, therefore reducing the effect of the reduction in the month of August to 0.07% in real terms.
“As rumours start to build about a second reduction to base rate and mortgages are falling to record lows yet again, borrowers and providers alike are questioning how low these deals will actually go.”
