Rate paid on new savings deposits rises to 4.42% as mortgage costs edge up

The average rate banks and building societies paid on individuals’ new time deposits rose to 4.42% in September from 4.24% in August, the Bank of England said on Thursday.

Time deposits are interest-bearing accounts where only part of the balance can be reached without penalty, so they cover most savings products other than instant access accounts.

The rate on the outstanding stock of time deposits, which covers all such savings already held, was 3.44% in September, up from 3.41% in August.

Sight deposits, meaning instant access accounts that exclude ISAs, paid an average 1.66% on the outstanding stock, compared with 1.65% in August.

The Bank describes the “effective” rate as the actual interest paid. It is an average across all accounts, so it will not match any single provider’s advertised rate.

The effective rate on newly drawn mortgages rose to 4.63% in September from 4.60% in August, the Bank said.

The rate on the outstanding stock of mortgages was 4.03%, up from 4.00% in August and from 3.96% in June.

Interest-charging overdrafts became more expensive, with the effective rate up by 52 basis points to 20.79%. A basis point is one hundredth of a percentage point.

The effective rate on interest-charging credit cards edged up to 21.71% from 21.55% in August.

New personal loans moved the other way, with the effective rate falling to 9.85% from 9.96% in August.

The effective rate on new bank loans to UK private non-financial corporations, essentially businesses outside the financial sector, fell by 10 basis points to 5.47% in September.

For small and medium-sized enterprises, the rate on new loans decreased to 6.55% from 6.63% over the same period.

On the deposit side, the rate on new time deposits from those companies rose by 5 basis points to 3.52%, while the stock sight deposit rate fell by 4 basis points to 1.93%.

The outstanding business loan rate was 5.86% in September, up from 5.84% in August, the Bank said in its effective rates tables.

The Bank’s Monetary Policy Committee voted 6 to 3 in September to hold Bank Rate at 3.75%, its September minutes said. Three members wanted a rise to 4%.

The minutes said: “The Committee noted that financial conditions, and consequently the interest rates faced by households and business, had tightened since the start of the conflict and by further since July.”

The committee said there had been full and fast pass-through from short-term market rates to lending rates. It put the quoted two-year fixed mortgage rate around 95 basis points above its level before the conflict.

UK CPI inflation rose to 3.1% in August, the minutes said, and was likely to rise further over coming quarters.

The figures come from the Bank’s Form ER return, which is completed by 25 monetary financial institutions. The data are not seasonally adjusted.

Because each rate averages over all loan or deposit types and customers, the Bank says it is not possible to identify an individual institution’s rate for a particular product.

The Bank’s next release in the series is due on 30 November 2026.