You are here: Home - Saving & Banking - News -

Bank of England governor gives biggest indication yet of rate rise

Written by: Paloma Kubiak
The governor of the Bank of England has given his biggest indication yet that the Base Rate will increase in the very near future.

Speaking to the BBC today, Mark Carney, said: “If the economy continues on the track that it’s been on, and all indications are that it is, in the relatively near term we can expect that interest rates would increase somewhat.

“We’re talking about just easing a bit off the accelerator to keep with the speed limit of the economy and so interest rate increases when they come – when and if they come – will be to a limited extent and gradual.”

While the news is good for beleaguered savers, independent savings advice site, Savings Champion said they should shop around now to improve rates on money as even if rates rise, providers may not increase their rates as much as hoped.

Its research found that when the Base Rate was 0.50%, the average live easy access account was paying 0.74%. Today, that average rate has fallen to 0.35% – a drop of 0.39% when the Base Rate has only dropped by 0.25%.

For existing customers in closed accounts, the situation has been even worse. The average rate of closed easy access accounts in December 2012 was 1.03% – today it is just 0.38%.

Anna Bowes, director at Savings Champion, said: “This harsh environment for savers was caused, in the main, by the introduction of the Funding for Lending Scheme (FLS) in 2012, further exacerbated by the introduction of the Term Funding Scheme (TFS) and a Base Rate drop in August last year. The good news for savers is that both the FLS and TFS are ending at the beginning of 2018, so perhaps providers will start to need funds from savers once more. This, as well as a Bank of England Base rate rise, will hopefully really make a difference.”

However, Bowes added that as high street banks have cut rates to the bone and savers are waiting patiently for positive things to happen, the best way to minimise the pain is to shop around and move cash to better paying providers.

She said: “If you are unlucky enough to be in one of the rock bottom accounts paying 0.01%, by switching today to the best buy easy access account, you could increase the interest you are earning by 1.25% gross – five times that of a Base Rate rise of 0.25%.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
energy bills
MPs call for end to energy price ‘stitch-up’

Nearly 200 MPs have called on the government to introduce a widespread energy price cap to protect 17 million families...