Ahead of Thursday’s base rate announcement, Lucinda O’Brien, savings account expert at money.co.uk, has issued a warning to UK bank account holders, advising they must act before August 1 to secure high interest on their savings.
O’Brien told Birmingham Live: “Savings account rates have been consistently high this year as the base rate remained at 5.25%. The base rate has been stuck at this level since August 2023 after we saw consecutive increases from December 2021. Amazingly, the last cut in the base rate was in March 2020.
“The steady increases and resulting stability are good news for savers, with providers offering interest rates above 5% – significantly higher than the current inflation rate of 2%. However, the base rate has also pushed up mortgage rates, which is a burden for homeowners. From this perspective, a reduction in the base rate would therefore be very welcome.”
She said savers now face a tense wait ahead of the Bank of England’s next meeting on Thursday. Forecasters are unanimous that the Monetary Policy Committee will vote to cut the base rate from 5.25% to 5%.
Previously, it had been assumed that the key interest rate would remain unchanged in August and that changes were expected at the next meeting in September, she said. Forecasters have changed their stance and now believe that a rate cut could be on the table as early as this Thursday.
Recent statistics show that inflation remained stable at 2% in June, meeting the Bank of England’s target. But the tide appears to be turning, with forecasters now saying there could be grounds for a rate cut as early as Thursday.
She said: “Recent figures show that inflation remained stable at 2% in June, which was the Bank of England’s target. If inflation remains low, that is a good reason to start cutting the base rate, but there are other elements to consider. For example, inflation in the services sector (education, hospitality and culture) remains high at 5.7% and this could be the sticking point that leads the committee to wait to cut the base rate.”
Financial experts are advising savers to make decisions before Thursday’s announcement. She noted: “Since Thursday’s decision could go either way, it is best for savers to act now.”
She added specific banking details: “Currently, Union Bank of India offers a one-year fixed rate account at 5.40% which can be opened with £1,000. Raisin UK also offers a range of competitive rates from providers including GB Bank’s one-year fixed rate account at 5.26% and Ziraat Bank’s one-year fixed rate account at 5.25%.”
She said both accounts can be opened online and with a minimum deposit of £1,000, with high-interest options available for those looking to maximise their savings.
O’Brien added: “Oxbury offers a 5.04% easy access account, but you need to deposit at least £25,000 and keep the amount above that to get the interest paid out monthly. Alternatively, Principality offers a 5.0% easy access account that can be opened with just £1, but bear in mind that you can only make three withdrawals per calendar year.”
