UK savers urged to act before interest rates start falling
Britain’s savers are being encouraged to act quickly and secure top savings rates before they start to decline.
With the Bank of England widely expected to cut interest rates on Thursday, experts are warning against complacency, noting that competitive deals are still available for those who shop around.
Despite recent reductions, providers are still offering easy access and fixed-rate savings accounts paying over 4.5%, driven by market competition.
The Bank’s base rate, which reached 5.25% last summer, has since been trimmed to 4.5% after three cuts – two last year and one in February. Financial markets now see a drop to 4.25% as highly likely, and some economists argue a sharper cut is necessary in response to global economic headwinds. Further reductions are expected later in the year.
Rachel Springall, finance expert at Moneyfacts, said: “The base rate is likely to fall further in 2025. This is bad news for savers, so it’s crucial they regularly review their savings rates.”
She added that inaction could lead to poor outcomes, such as leaving money in current accounts with little or no return.
Anna Bowes, co-founder of savings advice firm The Private Office, said time is running out to lock in better deals. “There are still some excellent rates out there, including inflation-beating options,” she said.
Top rates often come from smaller or lesser-known banks. Fixed-rate bonds – which require savers to lock in funds for six months to five years – offer the highest returns. For example, one-year bonds from Cynergy Bank and Tandem Bank currently pay 4.55%, while JN Bank UK is offering 4.48% on five-year bonds.
That said, not everyone can afford to lock away their cash, especially as many face continued cost of living pressures. Easy access accounts remain essential for flexibility. According to Moneyfacts, the average rate is 2.78%, but the best-paying accounts — including from apps like Chip and Sidekick — offer up to 4.76%, though with some restrictions on withdrawals.
Springall warned that failing to secure a competitive rate could erode savings in real terms. “Your money should be working to outpace inflation,” she said.
While falling interest rates may be bad for savers, they offer relief for borrowers. Homebuyers and remortgagers are benefiting from lower mortgage rates, as lenders engage in pricing battles.
Nationwide, the UK’s largest building society, said it would reduce rates again from Wednesday, offering some fixed-rate deals below 4% for first-time buyers — the first time since September 2024. More reductions could follow if the Bank cuts rates as expected.
