On a recent episode of his BBC Sounds podcast, Martin Lewis said as the Bank of England has started to cut interest rates, we have all been focused on mortgage rates dropping, that we have not realised savings interest rates have been dropping alongside them
Martin Lewis has issued a warning to people with savings – as too many Brits have their many “stuck” in poor paying accounts.
On a recent episode of his BBC Sounds podcast, the Money Saving Expert (MSE) website founder said as the Bank of England has started to cut interest rates, we have all been focused on mortgage rates dropping, that we have not realised savings interest rates have been dropping alongside them.
A few months ago interest rates on savings accounts – so the amount you earn from keeping your morning in that account – were at the highest they had ever been. However now, Martin Lewis says the highest sits at around 5.13%.
On the podcast Martin said: “It’s worth talking about savings for a minute as we have been talking about mortgages, but the mirror of what is happening with mortgages is, with mortgages variable rates have stayed high and fixed rates are dropping. The same is happening with savings.
“The easy access rates, which are the variable savings where you can put your money in and take it out, have stayed high but fixed rate savings had dropped. The highest access payer at the moment is at 5.15% and it’s the cash ISA from Trading 212. The next highest is now Oxbury Bank at 5.13% with a 90 days notice.”
At the time of the podcast recording, Martin noted that another bank had a higher rate than Oxbury, however this was pulled soon after it was recorded. Martin warned listeners that savings rates were a volatile market at the moment and rates were changing “day by day”.
He added: “So if you’re looking to fix right now, there are no fixes available, apart from the one that’s a bit tricky, over 5%. So the question you have to decide when it comes to saving is, do I want to go for easy access savings? It’s expected that the Bank of England base rate will be dropping soon.
“So most easy access savings will drop. The fixed rates that are available have factored in, to an extent, future drops. Just like with mortgages, savings fixed are based on long term future predictions. So you might say ‘Hmm I could go easy access because I can get a slightly high rate’ or you might say ‘I’m worried those fixed rates are going to drop even further. I’m going to get them while I can access them’. So there’s actually a very mirror debate going on in savings about what you should do as there is in mortgages.”
