In response to rising inflation, the Bank of England increased the Base Rate in December, February, and March, with this now at 0.75% pa.
As a result, interest rates have increased on both mortgage products and savings accounts. Santander, for example, have now increased the interest rate on their 1-2-3 current account from 0.30% pa to 0.50% pa.
National Savings & Investments (NS&I) have increased the rates on both its Income Bonds and Direct Saver accounts to 0.50% pa. The annual equivalent prize rate of the Premium Bonds remains unchanged at 1% pa, if you are averagely lucky, but there is no guarantee you will achieve this return.
The above noted increases are still short of the Base Rate and although savings rates are changing on an ongoing basis, it appears that not all Banks and Building Societies are passing on the latest rises to savers at present.
The best instant access rate available is now up to 1% pa gross variable, with some providers including an introductory bonus in the headline rate. Whilst it is possible to achieve up to 1.5% pa gross variable, these rates are often linked with current accounts, so will require savers to open this account first if they do not hold one already. This will not suit the majority of savers, where simplicity is desired.
Fixed rate accounts have also increased: 1-year fixed rate 2.05%; 2 years 2.35%; 3 years 2.50%; 4 years 2.55%; 5 years 2.60%.
It is important to ensure that you are achieving competitive rates on your savings and there are a number of comparison sites available to aid your research. We regularly check this for our clients as part of our ongoing service.
Ensuring your funds are covered by the Financial Services Compensation Scheme (FSCS) is also an important consideration when researching savings accounts. The FSCS protects deposits up to £85,000 per financial institution should a financial firm fail. It is important to note that this limit applies per institution and not per account, as many providers share a banking licence, so in this case, the £85,000 limit is spread across total savings with linked providers.
If you would like to discuss the above, please do not hesitate to contact a member of our team.
All rates quoted are annual, before tax, and mainly for online access as at 26/04/22.
