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Revealed: the best savings rates one week after the base rate rise

Find out how the base rate hike has impacted savings

Revealed: the best savings rates one week after the base rate rise

One week on from the Bank of England’s decision to raise the base rate to 0.75%, few major lenders have offered better deals to savers, Which? analysis has found. So where can you get the best returns on your cash?

Last week, members of the Monetary Policy Committee (MPC) voted unanimously to increase the base rate from 0.5% to 0.75% – taking it to the highest level in almost a decade.

In theory, this is meant to be good news for savers, who have faced poor returns in recent years, but many major banks are yet to pass on the increase. Which? rounds up the highest-rate savings accounts currently available.

How the base rate affects savings

The base rate is the Bank of England’s official borrowing rate. Nine members of the Bank of England’s Monetary Policy Committee meet to decide the base rate every month, eight times a year.

The unanimous vote to hike to base rate on Thursday is only the second increase in over nine years, so while the rise is small, it’s likely to have a significant impact on your finances.

Borrowers tend to lose out when the base rate rises, as banks pass on the increased cost of borrowing on products like mortgages, loans and credit cards.

On the other hand, a base rate rise is good news for savers, as it should prompt banks to increase rates to encourage more deposits.

Have banks passed on the base rate increase to savers?

It’s only been a week since the last base rate decision, but some banks have already announced modest increases to their savings rates, though only few savers will benefit from the full 0.25% bump.

So far, just Skipton Building Society and Beverly Building Society have announced they will pass on the 0.25% rise to savers and mortgage customers in full.

Nationwide will increase the rate for variable rate mortgage customers by 0.25%, but only pass on a 0.1% boost to most of its savers on variable deals.

The building society said its Loyalty Isa, Flex Isa and Loyalty saver rates would increase by 0.1% and instant access accounts would get a 0.15% uplift, while its Help to Buy Isa and Smart account would be the only deals to get the full 0.25% boost.

TSB has also announced it will pass on the 0.25% hike to borrowers on their variable rate mortgages but will only boost the majority of its variable rate savings accounts by 0.1%. Only its Junior Cash Isa and Young Saver will receive the full 0.25% increase.

Lloyds Banking Group, which includes the brands Lloyds Bank, Halifax and Bank of Scotland, said that they will be passing on the full 0.25% rise to variable rate mortgages but that their savings rates are currently under review.

A HSBC spokesperson also told Which? it was still reviewing mortgage and savings rates in light of the Bank of England’s decision.

A spokesperson for NatWest, Royal Bank of Scotland (RBS) and Ulster Bank said they would be communicating rates for savers and borrowers ‘shortly’ but that a significant majority of savers would see an increase.

Santander and Barclays have also not yet revealed their plans for saving rates following the base rate rise.

Meanwhile, challenger banks are stepping up with the launch of table-topping deals. Wyelands Bank launched two market-leading fixed-rate bonds the day after the base rate was increased.

Its one-year fixed-rate bond pays 2.15% AER and the two-year fixed-rate bond pays 2.25% AER on deposits from £5,000 up to £1m. You can open the accounts online and choose to have interest paid annually or monthly.

Best savings rates

With rates changing, it’s worth shopping around to see whether you could be earning more interest on your cash elsewhere.

The table below shows the top rates on easy access, fixed-rate bonds and Isas right now and is arranged by the highest rate.

Account Type of account Minimum deposit Rate AER
Charter Savings bank Five-Year Fixed-Rate Bond Five-year fixed-rate bond £1,000 2.68%
Secure Trust bank Four-year Fixed-Rate Bond Four-year fixed-rate bond £1,000 2.51%
Charter Savings Bank Three-year Fixed-Rate bond Three-year fixed-rate bond £1,000 2.36%
Shawbrook Bank Five-Year Fixed-Rate Cash Isa Bond – Issue 10 Five-year fixed-rate cash Isa £5,000 2.30%
Wyleands Bank 24-Month Fixed-Rate Bond Two-year fixed-rate bond £5,000 2.25%
Wyelands Bank 12-Month Fixed-Rate Bond  One-year fixed-rate bond £5,000 2.15%
Shawbrook Bank Three-Year Fixed-Rate Cash Isa Bond – Issue 9 Three-year fixed-rate cash Isa £5,000 1.85%
Al Rayan Bank 24-Month Fixed-Term Deposit Cash Isa Two-year fixed-rate cash Isa £1,000 1.80%*
Hodge Bank Four-Year Fixed-Rate Cash Isa Four-year fixed-rate cash Isa £1,000 1.80%
Al Rayan Bank 12-Month Fixed-Term Deposit Cash Isa One-year fixed-rate cash Isa £1,000 1.60%*
Coventry Building Society Limited Access Saver Easy-access £1 1.40%
Al Rayan Bank Instant Access Cash Isa Easy-access cash Isa £50 1.35%*

*Expected profit rate
Source: Which? Money Compare

To find the right deal for your circumstances, you can compare hundreds of savings and Isas using Which? Money Compare.

Should you move your savings?

To beat inflation and prevent your cash losing value in real terms, it’s important to make sure you’re getting the best return on your savings.

The highest rates are currently available on fixed-rate deals, so you’ll have to lock up your cash to access them.

However, with the base rate tipped to rise further over the next two years, it might be worth considering an instant access or short-term bond to ensure you don’t miss out on a boost in the future.

You can find out more in our guide to choosing the best savings account.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms & conditions of a provider before committing to any financial products.

Categories: Money, Savings & Isas

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