Money savers across the UK are being urged to act before December. They are at risk of missing out on the best returns due to high inflation and possible Bank of England base rate cuts.
According to experts from Moneyfactscompare.co.uk, the UK’s leading provider of retail financial product data, the interest rate on the top one-year bond rose in November for the first time since July. The rate is currently at 4.46%, but this still remains lower than the 6.05% it was this time two years ago. Meanwhile, the average one-year fixed bond rate is 3.95% gross, which is higher than the five-year average of 3.93%.
Putting savings account earnings into perspective, Moneyfacts said savers who had put away £10,000 in the top two-year bond would now have £1,000 in interest. However, those who had an “average” paying account will have £888.
Savers are now at risk as interest rates are either stagnating or trending downward. Experts are urging them to lock in top rates now before a potential base rate cut in December hits.
Caitlyn Eastell, spokesperson at Moneyfactscompare.co.uk, said: “If it is to be believed that inflation has peaked, this may not bode well for savers, as the chances of a base rate cut in December rise significantly. Understandably, savers may not be thrilled by the news of a base rate cut, but any hesitation to lock in their rates now could mean they miss out in real terms.”
“Although it typically impacts variable rates in the first instance, it wouldn’t be surprising if providers factored this into their pricing for fixed rates.”
Ms Eastell added: “The latest Bank of England Money and Credit stats revealed that £5.8 billion was put into easy access accounts during September. This points to many savers adopting a ‘wait and see’ approach, and are unwilling to lock away their cash until after the Autumn Statement, when more certainty is expected.
“However, depending on what changes, it’s not guaranteed that markets will react favourably, so it may be best to secure the market-leading rates now.”
Chancellor Rachel Reeves will unveil the autumn Budget on November 26.