🔔 Bank of England cuts base rate to 0.25%

Today kicked off with the announcement that the Bank of England has taken the decision to cut the base rate to 0.25% from 0.75% in a bid to support households and businesses during the coronavirus outbreak.

Whilst we can’t ignore that the UK - and indeed the world - has bigger problems than just the rates paid to savers, today’s announcement is going to hurt those who rely on their savings income.

We do recognise that these are extenuating circumstances and of course such a move could be vital to keep the economy moving and support businesses - along with the announcement that another Term Funding Scheme for SMEs is to be launched.

That being said, today's rate cut is devastating news for savers who have lived with record low savings rates for over a decade. And, from past experience, we know just how damaging an emergency lending scheme can be to savings rates, let alone a cut in the base rate.

More recently, savers have seen cuts to both the best buy and existing savings accounts accelerate over the last couple of months, even though no base rate cut has happened until today. It is unsurprising then, that many providers have today already started pulling their fixed rate bonds from the market.

Some providers, including most of the big high street banks, are paying such low interest rates to their savers, there is very little wiggle room to make things much worse – for example Lloyds Bank is current paying just 0.10% on its on-sale Easy Saver. And Halifax cut the rate on its infamous off-sale Liquid Gold account to just 0.05% on 17 February. Will we see further cuts from the like of these?

While we are fairly certain that many, if not all, providers will pass on at least some of the dramatic rate cut to savers, we hope that those that do will match this action to support borrowers, in particular small businesses, not simply take advantage of this situation to improve their margins.

It’s vital that the FCA keeps a close eye on this behaviour.

The Bank of England has indicated that this is an emergency measure due to the coronavirus crisis. We will be very carefully monitoring what happens both now and when the base rate does eventually rise again.

In the meantime, if you’ve been thinking about locking some money away in a fixed rate to ride the storm now may be the time to do it. Many of the top rates are disappearing fast but some providers are bucking the trend and launching competitive accounts, so have a look at our Fixed Rate Bond and Sharia Fixed Term best buy tables, to check out the current top rates.