Savings Account Rates Forecast: Grab 5% AER Deals While You Can Says Specialist

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Savers are urged to consider locking in long-term savings deals at around 5.0% AER as the Bank of England's base rate is set to fall later in the year.

This is according to a new analysis following the Bank of England's February 01 interest rate decision and guidance update, which saw policy-makers push back against expectations for a rate cut as early as May.

"We don’t expect the base rate cuts to take effect until later this year," says Kevin Mountford, a financial expert from Raisin UK.

The Bank indicated it was no longer looking to raise interest rates but that it would sit in neutral for some time as it considers incoming data before cutting interest rates.

This provides some breathing space for those looking to save money at interest rates which will become increasingly scarce over the coming months.

"Savings rates have gradually decreased and the best rates have disappeared from the market," says Mountford.

Money market pricing shows investors anticipate Bank Rate to fall by approximately 125 basis points in 2024, taking the rate to 4% by year end.

A further 100bp of cuts are priced in for 2025, taking Bank Rate to 3%.

Based on these expectations, Raisin UK advises consumers to take advantage of any savings products offering over 5% AER, especially on longer-term fixed products that allow you to lock your money away for longer.

Although savings rates will decrease, those looking for a new mortgage will find some relief amidst expectations for a lower path in Bank Rate.

"For mortgage holders, swap rates have also declined based on where the market thinks interest rates will be. This is significant because swap rates are used to price fixed-rate mortgage deals," says Mountford.