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Bank of England savings data July 23

ended 29. August 2023

On Wednesday, the Bank of England is publishing the latest data on the amount of money people are putting into savings accounts (or withdrawing from their savings accounts). Last month, for example, it revealed that households deposited an additional £3.4 billion with banks and building societies in June. This was largely driven by net flows of £6.6 billion into interest-bearing time deposits, as people arguably sought to take advantage of the higher rates now available. A few Qs:

  • Are you see more people putting their money into savings accounts now that the returns are better?
  • Are banks and building societies as quick to up their savings rates as they are their mortgage rates?
  • Are people aware that, in most cases, their money is still eroding in real terms given the level of inflation? 
  • What other trends are you seeing on the savings front right now?

2 responses from the Newspage community

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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Those who have the ability to save are able to get excellent rates now, with the best on the market generating a real return on your money. With rates this high, there is no real need to seek higher returns from riskier investments to this is affecting the stock market. However, the figures released by the Bank of England will show savings rates declining. This is because most families are feeling the pinch of sky-high inflation and rocketing mortgage costs and simply cannot afford to put anything aside. Those who can, should be paying down their mortgage rather than into a savings account because the cost of debt is normally much higher than the return on savings.
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Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
Banks are very quick to pass on increases in interest rates in the form of higher mortgage rates, but much slower to pass these on to savers in the form of higher saving rates. They are businesses and this is their prerogative. If you are unhappy with the rates being offered by your bank, change bank. If enough people walk away, the banks will soon learn their lesson.

However, leaving money in a bank account could end up costing you a fortune in the long run. Historically the interest you can earn from savings has been less than the inflation rate. This means that although you may feel like your money is safe, the real value of it is worth less with every year that passes. Holding any more in cash than what you need for planned expenditure, plus a safety net, is a waste of your hard earned money.