Martin Lewis issues warning to savers as Bank of England pauses interest rates
Martin Lewis has issued an urgent warning for savers after the Bank of England decided to pause its base rate at 5.25% today.
In a post shared after the announcement, Martin Lewis urged savers to act now in case the best rates on savings accounts are pulled. Banks were initially slow at passing on the higher rates, however, they have recently started to step up and offer savers better rates for their cash. But MoneySavingExpert.com founder Martin has warned that this now could change.
He told his followers on X/Twitter that due to the pause, it was "therefore possible" that fixed savings rates could start to come down. This is because fixed rate savings accounts are based on longer-term predictions for the base interest rate. This means if anyone is looking to lock in a fix, then they will need to do it as soon as possible as rate could start to drop as soon as today.
In his post, he said: "URGENT SAVERS WARNING (pls share). 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). If so, and you were looking to lock in a fix, you'll want to open a top fix this minute as the rates could drop even by later today, certainly if it does happen by later this week."
However, for those feeling slightly panicked about the warning, the MSE founder did share some advice for those wanting to lock in the higher interest rates. He told his followers to "play it both ways". Martin advised his followers to open the fixed rate account today - but not fund it.
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When opening an account, you normally have a few days - usually between seven and 14 - to put money into the account. All you need to do then is hold it and wait and see what happens.
He said: "Tactic to play it both ways: Open the fix today, but don't fund it (you've usually 7 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."
In a follow up post, Martin noted that his warning also applied to mortgages. Martin clarified that it was a "similar situation in reverse" for new mortgage fix rate deals as they may start to come down over the coming days as they're also based on long term interest rate predictions.
He said: "For those asking it is a similar situation in reverse for new mortgage fix rate deals. We may (no guarantees) see them shaved down over the next few days, again as they're based on long term rate predictions."
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