The Bank's decision to keep the base rate at its current record low was no surprise, but it doesn't mean that the savings and mortgage markets are also on hold.
In the last few days alone, HSBC has launched an exciting new mortgage offer - the Rate Matcher product - Rothschild, best know for its private banking services, has entered the mainstream savings market and other providers including Abbey and Principality building society are marketing new savings accounts.
The HSBC mortgage deal could prove especially interesting to borrowers on standard interest rates, as the average Standard Variable Rate (SVR) has dipped by only 0.36 percentage points since February - just over a third of the full base rate fall.
Meanwhile, Rothschild's new two year fixed rate account is paying 4.35%, keeping the pressure on providers to maintain strong rates in the fixed bond market. And Principality has upped the ante with its new 30 day notice account, which at 2.90%, is a market leader.
Mortgages
Fixed rates have soared in popularity recently. New research from Abbey shows that demand for variable-rate deals has almost halved since the start of the year as borrowers seek to lock in to a fixed rate while interest rates are at rock bottom.
HSBC is hoping to cash in on this trend by reintroducing its Rate Matcher mortgage offer. Under the terms of the offer, borrowers can approach HSBC to match or beat existing mortgage rates as low as 2.49%, and fix them for up to five years - although the lowest rate is only available over two.
The booking, or arrangement, fee will depend on which rate, term and loan to value ratio each individual borrower chooses and could hit almost £5,000, although HSBC claims an average fee should be under £1,000.
The Rate Matcher deal is only available for a limited period, though, with customers signing up from June 8 getting a maximum of six months after paying the booking fee to draw down the HSBC loan. The maximum loan to value ratio is 75% and the loan size is also capped at £250,000.
HSBC claims that this gives more than one million homeowners that chance to switch without incurring early repayment charges, Louise Cuming, moneysupermarket.com's mortgage expert believes the 75% loan-to-value cap will exclude many borrowers.
She said: "For some borrowers this deal will represent a significantly lower rate than the SVR their current lender is offering and the six month drawn down delay offers real flexibility for many still on an existing deal. However, the maximum LTV of 75% severely limits the deal's audience and for those with the equity, a hefty up front fee is likely to prove quite a deterrent."
However, even though demand for fixed rates is on the up, it's not the only part of the mortgage market seeing activity. Tracker rates for new borrowers could also edge downwards as indications suggest the funding pressure lenders have been facing may be beginning to ease. At the end of May, Co-operative Bank launched a three-year tracker offering a market-leading rate of 2.39%. There is a £995 arrangement fee, but the deal is only available for mortgages up to 75% of the property's value. Life remains tough if for those with a deposit of less than 25%.
Lloyds TSB's Lend a Hand mortgage, which was launched a few weeks ago, was widely welcomed because it is specifically designed to help those struggling to get onto the property ladder due to the fact they don't have a large enough deposit (for more information on this deal, read our article 'Lloyds TSB helps first time buyers'). More lenders need to start offering loans to those with smaller deposits again if the mortgage market is to return to some sort of normality.
For more information on what's happening in the mortgage market, watch our latest video 'MPC decision June 2009'.
Savings
Despite the fact base rate has been static since March, activity continues in the savings arena and we've seen the first new entrant to the main retail market for some time.
Rothschild, the private bank, has launched a Reserve Fixed Rate Account, paying 4.35% for two years. The minimum investment is £20,000, which is quite high. However, if you don't have that amount to lock away for two years, ICICI Bank's two-year HiSave account is also paying 4.35% and this is available on balances of just £1,000 or more.
If you don't have money you can afford to lock away - most fixed rate bonds don't allow you to access your savings during the fixed term - Principality Building Society has launched an attractive new account.
Its 30 Day Direct Account pays 2.90% on balances above £1,000. The rate includes a 12-month bonus of 1% and although unlimited withdrawals are allowed, you must give 30 days' notice before you can access your money.
If you would prefer an account that allows immediate access, ING Direct's Savings Account is offering 2.75% and the minimum deposit is just £1. The rate includes a 12-month bonus of 2.22% but the bonus is fixed, so the rate shouldn't drop unless ING reduces its underlying rate of 0.53%, which is unlikely unless base rate falls again.
Other options if you're looking for an easy access account include Derbyshire Building Society's Online Saver at 2.65% and Sainsbury's Internet Saver at 2.60% - both of these deals require a minimum deposit of £5,000.
And there are a host of providers paying 2.50% including Abbey, Alliance & Leicester, Egg, Birmingham Midshires and Newcastle Building Society.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing. Products underlined can be applied for directly.
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