Many banks are now offering savers over 5 per cent returns on their accounts as it has been revealed that UK banks have passed on more of the benefits of interest rate rises to savers than other financial institutions in the US and Europe.
The bosses of UK high street banks have been under pressure to pass on the rising base rate, now at 5 per cent, to savers, but new data shows British banks to be surprisingly generous.
Analysis from the rating agency S&P has found they have passed on the rises more effectively than lenders in other countries, including Europe and the US.
It found the UK’s biggest banks have passed on 43 per cent of the benefits to their customers in higher deposits.
US banks, meanwhile, passed on just 25 per cent of the Fed’s interest rate increases since it began hiking in March 2022 to April this year.
Europe, on the whole, has also been found to be passing on a smaller portion of their rates at 20 per cent on average. Ireland, Slovenia and Spain found themselves at the bottom of the table passing on just 7 and 8 per cent, respectively, to their customers.
Interest rates have been hiked by the Bank of England as it works to curb soaring inflation. Bosses have been accused of benefiting from this by increasing their profits from the difference between the rate they pay savers and what they charge people for their mortgages, known as net interest income. They were told off by MPs for not passing the increased rate to savers, although still passing them on to mortgage holders.
UK savers are now being offered better deals on their accounts, with returns of up to 6.1 per cent on offer, and although no rates can yet beat inflation at 7.9 per cent, experts say now could be a good time to tie up your money for longer with a fixed-rate account.
James Blower, founder of Savings Guru, said: “Inflation is a moving number and the government is committed to reducing it to 5.3 per cent so if you believe they can, now is potentially a rare time when savers could lock in to real terms rate gains after inflation is taken in to account.”
People looking to benefit from a high-return account should move fast as savings accounts are being pulled, likely due to oversubscription, after an average of 27 days, down from 34 days in June. During the financial crisis in 2009, the average was 16 days, Moneyfacts said.
Below i, with help from Moneyfacts, have listed the savings accounts currently offering 5 per cent and over. The highest easy access account currently available is 4.52 per cent with Shawbrook.
Best buys – one year fixed
Tandem Bank – 6.15%
FirstSave – 6.10%
OakNorth Bank – 6.05%
Atom Bank – 6.05%
Ford Money – 6.05%
Hampshire Trust Bank – 6.03%
Monument Bank – 6.03%
Kent Reliance – 6.01%
OakNorth Bank – 6.00%
Best buys – two year fixed
FirstSave – 6.15%
Hampshire Trust Bank – 6.05%
Atom Bank – 6.05%
Ford Money – 6.05%
Ikano Bank – 6.05%
Kent Reliance – 6.05%
OakNorth Bank – 6.00%
Beehive Money – 6.00%
RCI Bank – 6.00%
Aldermore – 6.00%
Best buys – three year fixed
RCI Bank – 6.00%
OakNorth Bank – 5.96%
Hampshire Trust Bank – 5.95%
Ikano Bank – 5.95%
Cynergy Bank – 5.95%
FirstSave – 5.95%
Close Brothers Savings – 5.95%
United Trust Bank – 5.90%
Tandem Bank – 5.85%
Recognise Bank – 5.85%
