Martin Lewis issues ‘urgent savers warning’ as Bank of England base rate is held

Savers may see some rates being shaved down after the Bank of England paused its run of base rate rises, according to consumer champion Martin Lewis.

But he suggested that those considering locking into a top fixed-rate account could use a tactic to help them wait and see what happens to rates.

Writing on social media platform X, formerly known as Twitter, the MoneySavingExpert.com founder issued an “urgent savers warning”.

He said: “The Bank of England minutes ago voted to maintain interest rates at 5.25% – not increase as many predicted. It’s therefore possible fixed-rate savings may shave down their rates at speed (as they’re based on longer term predictions of interest rates).”

Mr Lewis highlighted a tactic that savers considering locking into a fixed deal could use to “play it both ways”.

Mr Lewis continued: “Open the fix today, but don’t fund it (you’ve usually seven to 14 days to do that).

“Just hold it so you’ve got it available, and you can wait and see what happens to rates. If they go the other way, just don’t fund the facility you’ve opened now – that’s not a problem.”

Savings rates have surged in recent months as the base rate has increased.

Earlier this week, NatWest said the number of fixed-term accounts opened in the first half of 2023 was around 17 times the total it recorded in the same period in 2019.

More than 82,000 fixed-term savings accounts were opened in the first half of this year, the bank said.

This compares with 4,700 in the first half of 2019, according to NatWest’s data.

Nationwide Building Society, which launched a regular saver account on Thursday with 8% interest, has also previously reported seeing a jump in people snapping up fixed-rate deals.

Tom Riley, director of retail product at Nationwide, said earlier this week: “In recent months we have seen an increase in people taking out our fixed-rate accounts. Given the rates on offer we have found savers are increasingly willing to lock their money away for a period.”

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “If your current fixed-rate deal doesn’t come to an end for a while, don’t lose faith.

“The Bank of England’s insistence that the fight against inflation is ongoing means we could see more rises further down the line, and at the very least is likely to mean it keeps interest rates higher for a considerable period.”

According to data from financial information website Moneyfacts, the average one-year fixed-rate bond on the market on Thursday paid 5.44%, up from 5.35% on September 1.

The average two-year fix on the market paid 5.39%, up from 5.32% on September 1.

Average five-year fixed rates were slightly lower than at the start of the month, at 4.83% on Thursday, down from 4.86% on September 1.

The average savings rates were based on someone having a £10,000 deposit.