Savings Rates
With inflation dropping by more than expected, are we likely to see savings rates drop in the next day or so? And should people with savings consider locking in a fixed rate asap?
Copy article
7 responses from the Newspage communityCopy all
Copy all
Copy
Given that a Christmas rate cut is highly likely especially following the inflation print, financial institutions won’t be hanging around and are likely to reprice pretty sharpish. Given traders future rate cut bets, it’s unlikely that 2026 will be any kinder.
Copy
Interest rates were only headed in one direction and the latest inflation data suggests we are getting to the destination quicker than expected. It’s important to know what’s out there, and using a comparison site is important to understand what options you’ve got for your cash. Over and above what you may need, investments are more important as this is where the flight of capital heads when getting a return on your money in the bank becomes difficult.
Copy
The practical takeaway is to avoid a single solution.. Savers: do not assume “rates only go down from here”; keep a mix of liquidity + staged fixed terms, and ensure longer-term money is not relying solely on cash returns to outpace inflation. Borrowers: do not stretch affordability based on the hope of continuous cuts; consider whether you want some rate certainty (fixing) versus flexibility (tracker) given the risk of renewed inflation/volatility.
Copy
Inflation dropping could give the Bank of England the justification to reduce the base rate. If that happens then it's reasonable to expect savings rates to also come down. Fixing your savings is an option but ask yourself, why are you holding cash? If it's for an emergency then being tied up might not work. If it's long term savings, is cash providing enough growth or should you consider investments?
Copy
We're not fans of fixed rate savings.
Cash is meant to be liquid ie. Accessible when it's needed.
Those with savings should consider how much cash they need, and beyond that how they might put that money to work a bit harder for them.
All of this should be done in the context of a proper financial plan which will help answer these questions and ensure savings and investments work in harmony with how that money will be spent in the future.
Cash is meant to be liquid ie. Accessible when it's needed.
Those with savings should consider how much cash they need, and beyond that how they might put that money to work a bit harder for them.
All of this should be done in the context of a proper financial plan which will help answer these questions and ensure savings and investments work in harmony with how that money will be spent in the future.
Copy
Interest rates are very likely going to fall due to the larger than expected drop in inflation. So savers that can afford to tie up their money could be wise to lock in to a fixed rate now before banks and building societies cut their rates.
Copy
Savers have perhaps 48 hours to lock in current rates before they vanish into the digital ether, taking 4.5 percent one year bonds down to 4 percent territories that make cash savings barely worthwhile after inflation and tax erosion.
Property, quality equities, and inflation linked assets offer more robust protection against currency debasement, while cash deposits will likely promise nominal returns that deliver real losses over time.
Over the coming months we will see the difference between those financial survivors and the ultimate casualties. There are two types of people in Britain today, those that understand that falling rates reward borrowers and punish savers. These people will gravitate their capital toward productive assets immediately, while those who cling to the security offered by high street deposit accounts will soon watch their purchasing power evaporate one basis point at a time.
Property, quality equities, and inflation linked assets offer more robust protection against currency debasement, while cash deposits will likely promise nominal returns that deliver real losses over time.
Over the coming months we will see the difference between those financial survivors and the ultimate casualties. There are two types of people in Britain today, those that understand that falling rates reward borrowers and punish savers. These people will gravitate their capital toward productive assets immediately, while those who cling to the security offered by high street deposit accounts will soon watch their purchasing power evaporate one basis point at a time.