Banks/Building societies and fixed bond interest rates

BanjoString

Watching the OBR press conference yesterday, they said they expect savings that some people have been able to acrue/hold since COVID, will begin to get used as inflation bites.
If the overall amount the uk is holding in savings accounts reduces to a significant degree, how much do people think this reduction influences banks and building societies in terms of the rates they offer on savings accounts. I know there are multiple factors that affect rates, but if institutions are competing between each other and for people to hold their money with them as savings dwindle, will this have any discernable effect on keeping rates attractive for savers?

cricidmuslibale

My opinion is that it ought to mean that savings interest rates are generally a little higher relative to the Bank of England base interest rate than they are at the moment.

I’m a little surprised tbh that we’re now 15 days after the last base rate rise to 3% and, apart from Aldermore’s double access saver which was only available for a few days, the leading non ISA easy access rates still haven’t reached 3% or thereabouts! That is except for HSBC’s online bonus saver which only pays 3% (on amounts up to £10k) for months where no withdrawals are made; 0.5% otherwise.

Now roughly this time last month, Santander stirred things up in a good way with the sudden appearance of their 2.75% e-saver account, paying 0.5% above the B of E base rate at the time. Cynergy and Sainsbury’s Bank soon responded with fairly similar 2.75% easy access accounts. I’m very much hoping that a brave bank or building society will jump in in like manner this month with a true easy access account paying at least 3%, although I sadly suspect an easy access account paying 3.5% is probably too much to hope for just yet!

Albermarle

BanjoString said:

Watching the OBR press conference yesterday, they said they expect savings that some people have been able to acrue/hold since COVID, will begin to get used as inflation bites.
If the overall amount the uk is holding in savings accounts reduces to a significant degree, how much do people think this reduction influences banks and building societies in terms of the rates they offer on savings accounts. I know there are multiple factors that affect rates, but if institutions are competing between each other and for people to hold their money with them as savings dwindle, will this have any discernable effect on keeping rates attractive for savers?

Rates also depend on the demand for loans from banks. If this dropped or the request were seen as too risky, thenthe banks need for saving deposits would drop.
So overall it is very difficult to predict due to so many competing factors.

Newly_retired

Santander needed money in case of people defaulting on mortgage rates following the increase in interest rates. They presumably got enough in from their 2.75% easy access account. 

happybagger

For anyone interested, ONS UK Savings Ratios

Millyonare

First, the OBR has an appalling forecasting record, frequently wrong (by a lot), bizarrely pessimistic, and always trying to talk down the future country, so I wouldn't hang on their every word.

Second, the UK and world credit / debt markets today are in good shape, plenty of liquidity, trillions available in wholesale markets at the press of a button, so a lower domestic savings ratio is not going to unduly bother the UK banks. It's a small part of the overall pie.

Answer to the question is therefore "no".