Savers have been urged to lock in the best rates now before an expected interest rate cut by the Bank of England in a few weeks’ time. The BoE’s current base rate is 4.25%, with experts anticipating a cut next month despite inflation rising to 3.6% in June.
Sarah Coles, Head of Personal Finance at broker Hargreaves Lansdown, said a cut in August is still on the cards with the chances of a cut falling slightly but still looking incredibly likely. She said savings rates are trending downwards, pointing to Moneyfacts figures showing the average 1-year fixed rate dropping from 4.03% two months ago to 4.02% this time last month and 4.01% now.
Ms Coles added: “These aren’t dramatic movements, but over time they do add up. It means that anyone considering fixing a savings rate should do so sooner rather than later, while there are some strong deals around.”
The Express asked finance experts where savers can find the best deals before the Bank’s rate-setters meet on August 7.
Samuel Mather-Holgate, Independent Financial Adviser at Mather and Murray Financial, told the Express savings rates are still good compared to the pre-Covid “pittance”.
He said Chetwood bank is offering 4.5% on its six month fixed rate bonds and Atom Bank is currently offering the best instant access saver at 4.75%.
Mr Mather-Holgate cautioned: “But if (BoE Governor) Andrew Bailey reduces the Bank of England base rate, this will likely fall.”
Anita Wright, Chartered Financial Planner at Ribble Wealth, said savvy savers can still access competitive returns across all time frames.
She said for short-term fixes, Oxbury Bank leads with 4.62% for six months and 4.61% for three, while GB Bank offers 4.5% with added flexibility on interest payment.
Ms Wright said: “These are ideal for those seeking returns without locking money away long-term.”
For two-year terms, she said DF Capital leads at 4.44%, with GB Bank and JN Bank close behind, with JN Bank allowing deposits from just £100.
She said for three-year fixes, DF Capital offers the top rate at 4.43%, slightly ahead of GB Bank and Birmingham Bank.
Among established brands, Ms Wright said Leeds Building Society offers 4% and NS&I provides up to 3.88%.
Ms Wright said: “With rates edging down, now may be the time to act. Savers should align rate, term and provider strength with their needs and avoid letting cash stagnate in low-interest accounts. Even short-term fixes offer strong value in today’s market.”
Scott Gallacher, Director at Rowley Turton, suggested savers should currently be aiming for around 4.5% on a decent fixed-rate savings account, although rates are slightly lower for fixed-rate Cash ISAs.
He told the Express: “For competitive rates, it’s hard to beat Castle Community Bank, which is offering an excellent 4.59% on a one-year fixed-rate bond.
“For basic-rate taxpayers, this comfortably keeps savings ahead of the current 3.6% inflation rate. The rate dips slightly to 4.38% for a three-year fixed bond, but this remains one of the best rates available and reflects market expectations that interest rates will fall in due course.”
Mr Gallacher said for people willing and able to lock their money away for longer, Close Brothers is offering 4.35% on a five-year fixed-rate bond, providing “a solid option” for savers seeking longer-term certainty.
