But you don’t need to wait for better returns
Last weeks ‘Super Thursday’, as was dubbed by the media, included three key events in one day; the MPC decision on interest rates, the minutes from that meeting and the quarterly inflation report. All signs now point to a rate rise in 2016 with markets predicting the first move in over six years to be in the spring. Finally we can hope to see an end to record low interest rates and frankly one of the toughest times in living memory for savers. Although Mr Carney is standing firm that the timing of the interest rate rise cannot be predicted in advance, he admitted that the likely timing of the the first increase is drawing closer.
All signs seem to point to a rise coming, not least as we’re seeing new and improved rates for new savings accounts.
There is a generation of young savers that have never experienced an interest rate rise and have only known record low rates. But at the other end of the scale there are savers, especially pensioners, who have relied on their savings income and will no doubt be breathing a sigh of relief that better rates look set to come.
The great news is that savings rates are already on the rise with one year fixed rate bonds and notice accounts at a two year high and the best buy easy access account averages are at levels not seen since early 2014. This week has seen a flurry of activity for new fixed rate ISAs with Leeds Building Society and Kent Reliance all launching market leading rates. See our Fixed Rate ISA best buys for more details. Saga is also in on the act with a new best buy 3 year fixed rate bond, although beaten by Paragon Bank who still holds the top spot – for now! See our best buys for full details.
There’s a real feeling here at Savings Champion that we’re turning a corner. Competition is desperately needed in the market to boost rates and this week has introduced more providers to the mix aside from the newer challenger banks. Frankly the more providers there are the better the competition.
However, savers cannot afford to rest on their laurels. We must remember that a rise in the base rate does not guarantee a rise in your savings rate, certainly existing savings. Providers have long tinkered with existing rates following a base rate rise or fall, so it’s unlikely all savers will reap the full benefit of future rises. Added to that, there has been no movement in the Bank of England base rate for over six years, yet we’ve still seen over 3,500 rates cut for existing savers following the launch of the Funding for Lending Scheme 3 years ago; almost 900 of these so far this year, which only goes to show the link between the base rate and savings rates has long been broken.
You don’t need to wait on a rise in the base rate, but can act now to secure better returns. Find out how you can earn up to 7% AER. Rates have been on the up for several months, mainly driven by the challenger banks that have revived competition in the savings market, but now more providers are getting in on the act. Leaving savings in an uncompetitive account is like throwing money away. Better rates are available now and hopefully we'll see even more in the coming months and years. Speak to one of our specialist savings advisers on 0800 321 3581 for any questions you might have and for help in finding the very best rates.