Six of the UK’s major banks and building societies are set to cut interest rates on savings accounts after the Bank of England lowered the Base Rate last month. December’s reduction saw the Base Rate drop to its lowest in nearly three years at 3.75%, down from 4%.
Governor Andrew Bailey noted that the UK has “passed the recent peak in inflation and it has continued to fall”, enabling the MPC to cut borrowing costs for the fourth time this year. “We still think rates are on a gradual path downward,” he added. “But with every cut we make, how much further we go becomes a closer call.”
The base rate is used by the Bank of England to charge other banks and lenders when they borrow money. When the base rate rises, banks tend to increase savings interest rates to attract deposits, and when it falls, savings rates tend to decrease, encouraging borrowing and spending to boost the economy. Among the banks lowering interest rates in response to the Bank of England’s latest cut are Barclays, Lloyds, Natwest, Santander, Nationwide, and Royal Bank of Scotland.
In an email to customers, Barclays said: “We regularly review our savings interest rates and want to let you know that we’ll soon be reducing some of them.
“We’ve made this decision following recent changes to the Bank of England base rate and market conditions. This means you’ll earn less interest on the savings you hold with us.”
Accounts affected include Rainy Day Saver, Blue Rewards, Reward Saver, and Everyday Saver. Rates will drop by up to 0.24% by January 26.
Natwest
NatWest is set to reduce interest rates on a range of accounts, including the Digital Regular Saver, Flexible Saver, Savings Builder, Help to Buy ISA, First Saver, and Adapt Account. Rates will drop by up to 0.25% on January 19.
Santander
Santander cut rates on the Edge saver, Easy Access Saver, Regular Saver, Limited Access Saver, and Fixer Term Saver by 0.5% on January 5. The interest paid for the first 12 months remains unchanged.
A spokesperson for the bank stated: “We regularly review rates in light of changing market conditions and offer a range of competitive current and savings accounts.”
Lloyds Bank has recently emailed customers informing them of changes. The bank said: “We regularly review the rates we offer on our variable savings accounts, which means they can go up or down at any time.
“Following the recent change to the Bank of England Base Rate, we’ve made the decision to lower your interest rates.” Interest on the Standard Saver and Easy Saver is being reduced by 0.25%.
Nationwide
From February 10, Nationwide Building Society will lower rates on certain savings products by up to 0.25%. The majority of products will reduce by less than the change in the Bank Rate.
Accounts affected include ISAs, Continue to Save, Child Trust Fund, Future Saver, Online Saver, Flex Instant Saver, Reward Saver, and Flex Saver.
Royal Bank of Scotland
Accounts affected include Digital Regular Saver, Flexible Saver, Savings Builder, First Saver, Revolve Account, Instant Access Savings, and Primary Savings. Rates will drop by up to 0.25% from January 19.