Will easy access saving rates increase again 2023?

cwep2

Prediction is a bit of a guess from anyone, but here goes...

The previous BoE rate rise was not great for savers in terms of being passed on, but given it was pre-Christmas and lots of rate rises had happened in previous few months it's not that surprising. The next rate rise (expected 2nd Feb) I would expect a bit more movement. Firstly there's been a few places raising rates on existing accounts in January to 3% or higher, eg Kent Reliance, Charter Savings, Coventry BS, Yorkshire BS (50k+) and the usual top of the pack (Al Rayan, Gatehouse, Zopa) have held back so would expect them to move on or around the next rate rise, which may prompt some of the 'chasing pack' (Atom, Tandem, Ford Money) to move up as well if not top of the pile, then a bit closer. Particularly if we see some of those names at 3.3% or higher those stuck  at 2.5-2.75 will see money withdrawn.

I don't expect Chase, Marcus/Saga or Santander to keep up with the rest, their rises tend to be few and far between.

Cynergy and Tandem just increased to 2.9% and 2.75% this week so probably not going to go up for another month, but who knows, Cynergy can be quite nimble.

But you also have to look at it from the banks point of view. Most of these places offering top savings rates also have a lending business (Car finance or Mortgages), if you look at the mortgage market a lot of people who had mortgage offers pre Truss/Kwarteng budget had locked in rates, even if completion was due a few months later, those who didn't probably saw mortgages go up so much any house buying plans were shelved in short term. So mortgage lenders probably didn't have many new borrowers rushing to them Oct-Dec, particularly when rates spiked a lot, but have now come off (2yr fixes down over 1% from their peak). But people who need/want to move will now be starting to be taking out new mortgages at these higher rates now and as the spring goes on which means lenders have more money lent out at higher rates, which means in turn they can borrow at higher rates = offer savers higher savings rates.

TL;DR mortgage market ground to a halt Oct-Dec 2022, and is slowly picking up again now but will accelerate in spring, which means more banks will have a need to take deposits and therefore lead to competition in savings interest rates again.

Whilst I don't think we will see the raises we saw in 2022, and peak (BoE) rates expected in March to Jun, but likely to be fairly flat for much of 2023 (don't expect a cut until earliest October, more likely 2024+ but an early end to war in Ukraine could bring this forward) I think we will see 3.5%+ easy access from at least 2 providers by April and 1yr fixes to stay 4-4.5% for now but we may see them go up again a little from 4.2 to 4.5%.

Albermarle

Bridlington1 said:

ericlered7 said:

phillw said:

westv said:
Pre covid rates were pants.

Pre brexit better for you?

Pre brexit rates were pants too.

You'd have to go back to pre-financial crash before you get any decent rates IMHO.

There were some very good rates just after the financial crash. I remember the rescued Northern Rock offering 7% for a fixed term . Although can not remember how long these offers lasted for , a year at most I think.

ChilliBob

I think that's about the time of the crazy Icelandic rates no? They were good.

Anyhow, yeah, I reckon the rates on easy access will increase as the year goes on. With 1 year fixes at 4.2 or so I'd not be surprised to see something like 3.75 mid/three quarters of the way through the year. 

Now, when they start to decrease I think is more interesting - as that dictates what length of fix is sensible in the current climate. Something I'm tussling with myself right now!

Gers

We've increased your interest rate We're committed to offering you the best rate we can, and so we're delighted to bring you some good news about the interest rate on your account.

EASY ACCESS ISSUE 8

Previous AER* New AER* Effective from 1.00% 2.00% 20 January 2023

Paragon Bank. Low to start with but now doubled!

phillw

Bridlington1 said:
You'd have to go back to pre-financial crash before you get any decent rates IMHO.

Kinda subjective don't you think?

2 x 123 @3% on £20000 with no restrictions seems like a long time ago.

GFC occurred because of stupid rates being offered, so that isn't good either.

eskbanker

phillw said:
GFC occurred because of stupid rates being offered

That's an unusual take - most would say that it was primarily caused by reckless lending rather than generous savings interest rates!

TiVo_Lad

eskbanker said:

phillw said:
GFC occurred because of stupid rates being offered

That's an unusual take - most would say that it was primarily caused by reckless lending rather than generous savings interest rates!

Indeed so. This is an interesting read from 2020 by the Bank for International Settlements for those that want to know more:

https://www.bis.org/fsi/fsicms1.pdf

Grouchy

https://www.economicshelp.org/blog/1485/interest-rates/historical-real-interest-rate/

ericlered7

Bridlington1 said:

ericlered7 said:

phillw said:

westv said:
Pre covid rates were pants.

Pre brexit better for you?

Pre brexit rates were pants too.

You'd have to go back to pre-financial crash before you get any decent rates IMHO.

Indeed