Following the Bank of England's decision to halt its base rate at 5.25% today after 14 consecutive increases since December 2021, renowned money-saving expert Martin Lewis has issued a crucial warning to savers. Lewis urged savers to consider opening a top fixed rate account immediately, anticipating potential drops in fixed savings rates, which are based on long-term interest rate predictions.
The expert expressed his concerns today, stating that fixed rate savings might decrease their rates rapidly. He advised those considering locking in a fix to act promptly as rates could potentially drop even later today or within the week.
However, Lewis also offered a strategy for those uncertain about the situation. He suggested opening the fixed account today but holding off on funding it immediately. Typically, savers have a window of seven to 14 days to fund the account after opening it. This tactic allows savers to monitor interest rates and decide accordingly. If rates decrease, they could choose not to fund the newly opened facility.
Lewis's warning also extends to new mortgage fix-rate deals. In a follow-up post, he explained that it was a "similar situation in reverse" for these deals, which may start to come down over the coming days as they are also based on long-term interest rate predictions.
Banks have recently started offering better rates for savers' cash after initially being slow at passing on the higher rates. However, with the Bank of England's decision to pause its base rate, this trend could change, prompting Lewis's urgent warning to his followers.
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