Rates offered on mortgages are now lower compared to fixed rate savings bonds over the longer term, new research has shown.

According to independent savings advice site Savings Champion, HSBC is currently offering a five-year fixed rate mortgage with an interest rate of 1.59% whilst the best five-year fixed rate bond which allows interest to be compounded each year is paying 2.35% with Paragon Bank.

L&C Mortgages associate director David Hollingworth said: “It’s never been better for mortgage borrowers, especially those with plenty of equity in their homes. Mortgage rates are at, or close to, record low levels and competition is still very much alive”

Savings Champion director Anna Bowes said: “Rather than simply waiting for rates to rise, perhaps it’s time for savers to take advantage of some of the longer-term savings accounts available, to hedge against a continued and sustained low interest rate environment, as while you are waiting for the Bank of England to act, you could be losing out on valuable interest.”

Research from Savings Champion has indicated how much an easy access account would need to improve by each year, if savers use these accounts whilst they wait for the base rate to rise.

"Assuming the rates remain the same for 12 months but are switched every year, in order to get the same return as that earned on the best 5 year bond, the rate on the easy access account would need to rise by approx. 0.55% every year," it said.

"Even if you picked a series of 1-year fixed rate bonds, starting at a higher rate of 1.83% (Wyelands Bank), in order to get the same return as the 5 year bond, the rate you would need when you switched each year would need to rise by 0.26% every year."

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