Savers have enjoyed a year of attractive returns, but experts warn that now is not the time to take your eyes off the savings market as deals decline amid the latest interest rate freeze.
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This will be the seventh month where the 5.25% base rate remains, and we can expect savings to continue on a downward trend- but rates still remain historically high.
Mark Hicks, head of active savings at Hargreaves Lansdown reassures savers that current rates “were the stuff of dreams for more than a decade, so don’t let the talk of rate drops put you off switching or fixing, and taking advantage while you still can.”
We explore the outlook for the savings market and the top deals left.
Savings rates are falling
Let’s start on a high- more than 900 savings accounts still beat inflation (currently at 4%)- but you will need to grab these deals fast before they slip out of your hands.
Whilst this is great news for borrowers, savers will take a hit as lenders continue to drop their rates on the best savings accounts.
MoneyWeek has been tracking the savings market. Here’s what has happened since the last interest rate freeze on 14 December.
- One easy-access deal was pulled by Beehive Money
- Seven lenders dropped their rates, with two deals falling below 5%
One-year fixed savings
- Six one-year fixed deals have been withdrawn
- 40 Providers have dipped their rates, with 9 products falling below 5%, and one deal even reaching the 3% region
Plus, the challenger bank’s easy-access saver plummeted from 5.22% to 4.51% AER in mid-January.
What are the best savings rates on the market right now?
Experts warn savers to bag the best saving deals on the market before they disappear.
Myron Jobson, senior personal finance analyst at interactive investor, reiterates: “The simple message for savers is: get a move on to nab the best deals before they’re gone.”
Here are the top deals on the market right now:
|Type of account
|One-year fixed bond
|Regular savings account
If you’re someone stuck saving with a high-street lender, there’s more of a reason to make the switch now and ditch your 1% savings, as you can earn more than 5% as it stands.
Will interest rates fall in 2024?
Most experts predict that the Bank of England will cut the base rate in the second half of 2024, which will push savings rates down even further.
“The best savings rates are seemingly on borrowed time due to the anticipation of cuts to interest rates later in the year”, Jobson adds.
You can see returns on the top easy-access account is higher than if you fix for a year. Hicks puts this down to predictions of interest rate cuts in the second half of the year, “as banks price in the rate cuts they’re expecting.”
He adds: “If you don’t need the cash for a year or more, you may be tempted to hold it in a variable rate account for a higher return in the short term.
“However, in the coming months, there’s a high chance that rates will fall, so if you don’t need the cash right now, fixing and guaranteeing the return for a year or more may well prove more rewarding."
Vaishali graduated in journalism from Leeds University and she has experience working with the likes of Leicester Mercury, Inews and The Week. She also comes from a marketing background, where she has done copywriting and content creation for businesses.
Currently writing about all things personal finance, Vaishali is passionate about finding the best deals around, whether it's the best credit cards or the cheapest personal loans, as well as sharing top money hacks to help people save and better manage their money.
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