Over the past year, savings and investment rates have been hit hard by the economic downturn resulting from the pandemic, as the Bank of England continued to maintain its base rate 0.1 percent The outcome of this has been a lack of competitive rates on the market for savers looking to protect their hard-earned cash. Recently however, new offerings from financial institutions, such as Wesleyan Bank, suggest there is light at the end of the tunnel for savers.
“This trend is also now starting to be mirrored on the easy access side, with some of the best-buy products now on the up, and the cash ISA market also showing signs of recovery.
“As the Bank of England Base Rate has remained at a historic low of 0.10 percent since the pandemic started, rates remain subdued in a relative sense compared to pre-pandemic, but there are a range of factors influencing this gradual uptick in pricing.”
The savers expert is offering insight to the British public on how these different factors could help them boost their savings.
Stamp Duty holiday
The Government’s Stamp Duty holiday dramatically increased the number of housing transactions to a record high, giving many Britons the opportunity to get onto the housing market.
“Rate increases across the savings market are a reflection of those higher lending requirements as financial providers fulfil these record numbers of completions,” Mr Sprawling explained.
“Although the deadline for the £500,000 threshold passed a few weeks ago, the stamp duty holiday remains available on properties valued up to £250,000 until the end of October, so that’s one factor pointing to today’s upward trajectory being maintained in the short term.”
Fixed rate market increase
On top of this, savers with maturing one-year bonds or ISA will be able to beat their previous rate if they buy the market best-buy, or the top-paying rate across a variety of specialist banks.
“There are a range of factors contributing to the fixed rate market moving first ahead of other product categories when it comes to price recovery,” Mr Sprawling added.
“Firstly, this is where the challenger banks are most active, it is therefore a more competitive space than easy access.
“The fixed rate category has also been in decline over the course of the pandemic, so providers are driving up price in order to entice savers to take up a fixed rate product.
“This has been effective, and we are seeing those competitive products perform well.
“My advice to savers is to make the most of this current trend and to take out those products while they last – the market at the moment is prone to volatility and it’s difficult to predict how it will fluctuate as we head towards winter.
“For customers not looking to fix their surplus cash, easy access rates are also consistently more competitive across specialist and challenger banks, so it’s a good idea to have a look at their provision in order to earn interest on all savings.”