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Home > Statistics > Explanatory Notes - Quoted household interest rates
 

Explanatory Notes - Quoted household interest rates

 

 
Overview
 
Quoted interest rate series are calculated monthly, as weighted averages for a range of lending and deposit products offered to households. The headline rates advertised by a sample of banks and building societies are collected and weighted together using the monthly balances, or new business volumes, reported by those institutions on Bank of England statistical forms.
 
Availability
 
Quoted rates are published monthly on the Interactive Database, firstly as provisional data on the 5th working day

of the following month, and subsequently as final data on the 21st working day of the month, on the Interactive Database and in Bankstats table G1.3.  See the statistical release calendar for the latest release dates. 
 
The rates published on the 5th working day for the latest month are provisional as they are weighted using the previous month's balances for new business amounts.  They may not include all rate changes that occurred up to the end of the month. Final data consist of end-month rates weighted using the relevant current month’s balances.  The provisional rates are therefore often revised when re-published on the 21st working day.     
Due to being weighted on quarterly balances, the buy-to-let mortgage rate series are provisionally weighted on earlier quarters’ balances until the relevant quarter’s data are released.  The table below shows how the weights update for each month of data.
 
​ ​ ​ ​ ​ ​ ​Month​ of publish​, and quarter's weight used ​ ​ ​ ​ ​ ​ ​ ​ ​
Month +1​ ​ Month +2​ ​ Month +3​ ​ ​ ​Month +4 Month +5​ ​

QR

data​

+5​ +21​

​+5

+21​ +5​ +21​​ +5​ ​​+21 ​​+5 +21​
Jan​ Q3 Q3 Q3 Q4 Q4 Q4 Q4 Q4 Q4 ​Q1
​Feb Q3 Q4 Q4 Q4 Q4 Q4 Q4 ​Q1
​Mar Q4 Q4 Q4 Q4 Q4 ​Q1
​Apr Q4 Q4 Q4 ​Q1 ​Q1 ​Q1 ​Q1 ​Q1 ​Q1 Q2​
​May Q4 ​Q1 ​Q1 ​Q1 ​Q1 ​Q1 ​Q1 Q2​
​Jun ​Q1 ​Q1 ​Q1 ​Q1 ​Q1 Q2
​Jul ​Q1 ​Q1 ​Q1 Q2​ Q2​ Q2​ Q2​ Q2​​ Q2​​​​ Q3
​Aug ​Q1 Q2 Q2 Q2 Q2 Q2 Q2 ​Q3
​Sep Q2 Q2 Q2 Q2 Q2 ​Q3
​Oct Q2 Q2 Q2 ​Q3 ​Q3 ​Q3 ​Q3 ​Q3 ​Q3 ​Q4
​Nov Q2 ​Q3 ​Q3 ​Q3 ​Q3 ​Q3 ​Q3 Q4
​Dec ​Q3 ​Q3 ​Q3 ​Q3 ​Q3 Q4
 
 
Data are generally available monthly from January 1995, although a number of series start in January 2011 and January 2012. 
 
The data are not seasonally adjusted. 
 

Sources
 

Each series is a weighted average derived from end-month interest rates for relevant products offered by a sample of the largest banks and building societies.  The sample is based on that used for Form ER (Effective Interest Rates).  The sample for Form ER is reviewed regularly to ensure that whilst using the fewest number of reporters, for each sector of the economy, there is at least 75% of MFIs’ business, as reported to the Bank on monthly balance sheet returns.  The sample for buy-to-let mortgage rates is based on that used on the Mortgage Lenders Administrators Return.
 
Advertised rates used in the compilation of these series are generally selected from Moneyfacts, an independent service that provides rate and product information for mortgages, consumer credit and deposit rates.  Occasionally, individual bank and building society information may also be used to monitor and check products and rates in conjunction with the data obtained from Moneyfacts.
 
Rates are included only for those institutions that advertise a product closely fitting the definition used for each series, with the result that the banks and building societies in the sample and the percentage coverage may vary from month to month as institutions withdraw from and introduce products to the market.
 
An average rate is not published if there are fewer than three institutions in the sample, due to reasons of confidentiality and a concern that the average may not be particularly representative.
 
The weights used to produce the weighted average series are derived from the end-month/quarter or average monthly/quarterly balances, or new business volumes, reported by those institutions on Bank of England forms.  These weights are then applied to the interest rates for individual banks and building societies.
 
 

Definitions

General

Rates are selected for inclusion according to certain criteria; some criteria are applicable to all series, whereas others are specific to the series in question.  The generally applicable criteria include:
·        Products must be widely accessible.
o   Generally, those only available through intermediaries were excluded prior to September 2016. From September 2016 data these products are included.
o   Prior to January 2011, branch-based products were selected as far as possible, but from January 2011 coverage was expanded for most series to include products available only via the internet.
·        All rates are expressed gross of tax. 
·        All selected products are denominated in sterling. 
·        Fees are not included. 
·        Cash bonuses and cash-backs are not included. 
·        Prior to January 2011 bonus rates were not included, but from January 2011 guaranteed (unconditional) bonus rates are included for some deposit series.

Where more than one product fits the definition for any series, the rate selected is the most competitive and/or has the fewest conditions attached.
 
When a bank or building society no longer offers a product closely fitting the criteria they are excluded from the aggregate until a relevant product is reintroduced.

 
Secured loan (mortgage) rates

Rate definitions –The headline advertised rate is selected rather than the APR (Annual Percentage Rate).
 
No allowance is made for charges or cash-backs.
 
Although fees are not incorporated into the rates selected, the effect of fees is taken into account in determining which mortgage rate to choose from the numerous products often available for each bank or building society.  This is done by calculating the effective rate of mortgage repayments on a loan of £150,000 for the relevant fixation period including the product fee spread over the length of fix.  The advertised rate for the most competitive product is selected for the quoted rate calculation.

Mortgage product definitions – Mortgage rates selected are those available to most borrowers and products restricted to first-time buyers, for example, are excluded. 
 
Rates selected are generally those available on loans in the range of £25,000 to £500,000. 
 
Loan-to-value ratio (LTV) measures the loan amount as a percentage of the property value; rates selected are the lowest available for loans of 60%, 75%, 85%, 90% and 95% LTV respectively.

Fixed term variable rate mortgages are those that either attract a short term (two year) discount relative to the institution's Standard Variable Rate (SVR), or add a premium to the Bank of England Bank Rate, or the lenders’ equivalent, for a short term.  Lifetime tracker products (previously named Bank Rate tracker) are linked to the Bank of England Bank Rate or the lenders’ equivalent rate for their term.
 
Reasonable time margins are allowed for fixed maturity products, as defined in the ER form definitions.  For example, mortgages with maturity between 21 and 27 months qualify as a two year loan. 
 
Prior to September 2016, products available via intermediaries only were excluded.  Due to these products becoming a more significant channel, intermediary-only products are now included from September 2016 data.
 
Weights are derived from the gross monthly mortgage advances reported on Forsm ER and MLAR as follows:
·        The 2, 3 and 5 year fixed-rate mortgages are weighted using new business gross advances for products fixed for <=2yrs, 3&4 years, and 5 years, respectively. 
·        10 year fixed-rate mortgages are weighted using new business gross advances for products fixed for between 5 and 10 years. 
·        Variable rate mortgages are weighted using new business gross advances for floating rate mortgages, and for lifetime tracker mortgages.
·        Buy-to-let mortgages are weighted using new business gross advances for buy-to-let lending from form MLAR.

 
Consumer credit rates

The overdraft rates selected are those applicable for authorised (or unauthorised, where no authorised rate is available) overdrafts and are expressed in terms of EAR (Effective Annual Rate).  Banks and building societies that charge a fee as opposed to a rate are excluded from the sample temporarily until a relevant rate is reintroduced.
Two series are published for personal loan rates:  for amounts of £5K and £10K. The rates are expressed in terms of APR, and no allowance is made for redemption penalties. 
 
Credit card rates are expressed in terms of APR and apply to standard credit card purchases.  If an institution offers more than one card, preference is given to the one deemed to be the most widely available.
 Weights are derived from data reported on Forms ER and IC as follows:
                                                                      
·        The overdraft rate series is weighted by monthly average outstanding interest chargeable overdraft balances reported on Form ER
·        From January 2009 the £5k and £10k loan rates are weighted by the monthly gross personal loan advances on loans fixed for 1 to 5 years reported on Form ER.
·        The credit card rate series is weighted by monthly gross credit card advances reported on Form IC.

 
Deposit rates

Accounts with conditional bonuses are excluded for all deposit rate series, for example, where the payout of the bonus is contingent upon a restricted number of withdrawals.
 
Moneyfacts publish interest rates calculated on both a monthly and annual basis and rates calculated on a monthly basis are included where possible except in the case of fixed-rate bonds and Cash ISAs where annual rates are used.
 
Rates on instant access savings accounts are selected for £1,000 balances. Rates series including internet-only accounts are available from January 2011, one including and one excluding guaranteed bonuses. These new series were first published in November 2012.
 
 
 
Rates on cash individual savings accounts (ISAs) are selected for the ISA allowance at the time. 
 
Two series for variable rate cash ISA rates including internet-only accounts are available from January 2011, one including and one excluding guaranteed bonuses. A series for 1-year fixed-rate cash ISA is also available from January 2011.  These new series were first published in November 2012.   A new series for 2-year fixed-rate cash ISA is now available from January 2012, and was first published in October 2016.
 
Rates selected for 1 year fixed-rate bonds have a fixed initial maturity of between 12 and 17 months.  Similarly, rates selected for 2 year fixed-rate bonds have a fixed original maturity of between 18 and 29 months, and rates selected for 3 year fixed-rate bonds have a fixed original maturity of between 30 and 41 months.  These series, introduced in November 2012 and October 2016 respectively, have data back to January 2012.  Rates are selected for £5,000 balances. Interest is calculated annually. 
 
Prior to January 2011 all deposit series were compiled using branch-based rates only, with the result that rates available only via the internet were not included.  Similarly, guaranteed (unconditional) bonus rates were not included. 
 
In order to maintain the relevance of the series, the ISA, Instant Access and Other Time series compiled on this basis were discontinued after December 2012 and replaced with ISA and Instant Access series including internet-only rates and guaranteed bonus rates
 
 Series for branch-based rates excluding products available only via the internet, and excluding all bonuses are available for periods from 1995, and were discontinued after December 2012.
 
Series for branch-based ISA rates excluding products available only via the internet, and excluding all bonuses are available for periods from 1999, and were discontinued after December 2012.  Unlike the other ISA series, this series was weighted using balances on Form BT.
 
 
 Weights are derived from data reported on Form ER as follows:
·        Instant access savings rates are weighted using average sight deposit balances.
·        Cash individual savings accounts (ISAs) rates were weighted by the stock of average daily cash ISA deposit balances reported on Form ER.  From January 2016, ISA rates are weighted by gross new business ISA deposits reported on Form ER.
·        Fixed-rate bond rates are weighted using gross new fixed-rate bond balances reported on Form ER from January 2011, and using gross new fixed-rate bond balances for the relevant fixed term reported on Form ER from January 2016.

 

Updates and Revisions

Quoted rates are published twice during the month: provisional data for the previous month-end on the 5th working day of the following month, and final data on the 21st working day.  Rates published on the 5th working day are provisional as they are weighted using the previous month's balances or new business amounts, plus they may not include all rate changes that occurred up to the end of the month.  Final data consist of end-month rates weighted using weights updated to the same month as the rates. The provisional rates are therefore often revised when published on the 21st working day.  The data published on the 21st working day represent end-month quoted rates.  The buy-to-let mortgage rate series is provisionally weighted on the previous quarter’s balances for new business amounts, and updated with the current quarter’s balances on the 21st working day in the third month of the following quarter.
 
 
Data can also be revised as a result of the receipt of additional information or corrections to or refinements of existing data.  In practice, such data revisions rarely occur beyond two years.  Significant revisions to back data will be footnoted in the month in which the change occurs.  

Valuation and Breaks

Most of the quoted rates series were started from January 1995 at which point separate series were published for banks and building societies, with weights derived from balance sheet returns for banks, and from FSA data for building societies. 
 
The following major changes were implemented in January 2008 when the current methodology was introduced:
·        The sources for weighting data were changed.
·        The sample was updated.
·        The combined bank and building society series were made available back to January 2005. 
·        The number of series published was reduced.
·        The separate bank and building society series and some combined bank and building society series were discontinued from December 2007.
In January 2011, as a result of the optimisation of the effective rates sample (Form ER), the quoted rates sample was updated.  The only series showing an effect greater than 0.1pp at the time was IUMBX67, where the effect was -0.20pp.
In November 2012, changes were made to some quoted rate series: several new deposit series were introduced and some were discontinued, weights were improved and certain criteria were changed to reflect changing market trends.
 
The largest revisions to existing series were to both personal loans series, the resulting revisions greater than 0.1pp were as follows:
 
Effect on IUMBX67​ Effect on IUMHPTL​
​2009 Jan​ ​0.38 ​2009 Mar ​0.20
​Feb ​0.31 Apr ​0.26
​Mar ​0.36 ​May ​0.18
​Apr ​0.44 ​Jun ​-0.45
​May ​0.40 ​Jul ​-0.55
​Jun ​0.20 ​Aug ​-0.24
Jul​ -0.69​ Oct​ -0.27​
​Aug -0.51​ Nov​ -0.31​
​Sep ​-0.60 ​Dec ​-0.43
​Oct ​-0.46 ​2010 Jan​ ​-1.04
​Nov ​-0.45 ​Feb ​-1.11
​Dec ​-0.64 ​Mar ​-1.08
2010​ Jan​ -1.32​ Apr​ -1.00​
​Feb ​-1.34 ​May ​-1.08
​Mar ​-1.23 ​Jun ​-1.00
​Apr ​-1.07 ​Jul ​-0.97
​May ​-1.08 ​Aug ​-1.10
​Jun ​-1.08 ​Sep ​-0.88
​Jul ​-1.37 ​Oct ​-0.90
​Aug ​-1.48 ​Nov -0.88​
​Sep ​-1.05 ​Dec ​-1.69
​Oct ​-1.41 ​2011 Jan​ ​-0.81
​Nov ​-1.44 ​Feb ​-0.70
​Dec ​-1.70 ​Mar ​-0.74
​2011 ​Jan ​-1.60 ​Apr ​-0.88
Feb​ ​-1.40 ​May ​-0.19
​Mar ​-1.32 ​Jun ​-0.33
​Apr ​-2.83 ​Jul ​-0.37
​May ​-2.16 ​Aug ​-0.47
​Jun ​-2.22 ​Sep ​-0.18
​Jul ​-2.08 ​Oct ​-0.16
​Aug ​-2.08 ​Nov ​-0.14
​Sep ​-2.21 ​Dec ​-0.21
​Oct ​-2.02 ​2012 Jan​ ​-0.18
​Nov ​-1.94 ​Feb ​-0.54
​Dec ​-2.07 ​Mar ​-0.72
​2012 ​Jan ​-2.18 ​Apr ​-0.80
Feb​ ​-2.78 ​May ​-0.65
​Mar ​-2.69 ​Jun ​-0.69
​Apr ​-2.71 ​Jul ​-0.46
​May ​-2.34 ​Aug ​-0.42
​Jun ​-2.51
​Jul ​-2.52
​Aug ​-2.52
​Sep ​-2.69
​Oct ​-2.48
 
 
As a result of improved weights and changing criteria to the 1 year fixed rate bond series, the following revisions were also published in November 2012.
 
Effect on IUMWTFA​
​2011 ​Jul ​0.11
​2012 ​Mar ​-0.11
​Jun ​0.12
 
Any structural change to back data in the quoted rate series will be footnoted in the month when the change occurs. Because of the nature of these products, banks move into and out of the sample as products change. Significant changes that are the result of this will also be footnoted.

All significant methodological changes will be detailed in a footnote published in the month when the change occurs.
 
In October 2016, weights used in Quoted Rates series were improved back to January 2016.  The weights are now more closely aligned to Quoted Rate products.  The impacts are shown in the table below
​Series

Min absolute

impact (bps)

Max absolute

impact (bps)

Absolute

average impact

 (bps)

Lifetime Tracker ​12 ​25 ​17
2yr fixed 75% ​0 ​3 ​2
2yr fixed 90% ​1 ​6 ​3
2yr fixed 95% ​0 ​2 ​1
3yr fixed 75% ​0 ​2 ​1
5yr fixed 75% ​1 ​5 ​3
5yr fixed 95% ​0 ​4 ​1
1yr fixed-rate bond ​0 ​7 ​3
2yr fixed-rate bond ​0 ​13 ​5
VAR ISA inc bonus ​3 ​12 ​6
VAR ISA excl bonus ​11 ​21 ​15
1yr FR ISA ​2 ​26 ​11
 

Key Resources

 

 Forthcoming improvements to interest rate statistics Greenish, B and Sanders, B (2016), Monetary and Financial statistics, September
 

Forthcoming improvements to interest rate statistics Murphy, J and Tibrewal, A (2012), Monetary and Financial Statistics, September

 

Developments in effective and quoted rates statistics Bassi, K (2011), Monetary and Financial Statistics, March

 

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