UK savers are being urged to act before August 1 to lock in big interest on their savings, according to an expert at money.co.uk. Lucinda O’Brien, the site’s savings account specialist, shared her insights ahead of Thursday’s base rate announcement.
Lucina explained: “Interest rates on savings accounts 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.
“These increases and the stability that followed are good news for savers, as providers have been offering interest rates of over 5% – well above the current inflation rate of 2%. On the other hand, the base rate has been pushing up mortgage rates and putting homeowners under pressure. From that perspective, a reduction in the base rate would therefore be more than welcome.
“But for savers, it now means an anxious wait for the next Bank of England meeting on Thursday. Forecasts are 50/50 that the Monetary Policy Committee will vote to cut the base rate from 5.25% to 5%. Previously, the expectation was that the base rate would remain unchanged in August, and instead something would change at the next meeting in September.”
She added: “But the tide appears to be turning, with forecasters now saying there could be a case for a base rate cut as early as Thursday. Recent figures show that inflation held steady 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 services (education, hospitality and culture) remains high at 5.7%, and this could be the sticking point that prompts the Committee to wait to cut the base rate.
“As Thursday’s decision could go either way, it is best for savers to act now.” She said: 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%. Both accounts can be opened online and with a minimum deposit of £1,000.
“Oxbury offers a 5.04% easy access account, but you need to deposit at least £25,000 and keep it above that to get interest paid out monthly. Alternatively, Principality offers a 5.0% easy access account that can be opened with just £1, but keep in mind that you can only make three withdrawals per calendar year.”
