What does the base rate rise mean for my savings?
It’s good news – sort of. Since the financial crisis of 2008, savers have suffered as interest rates remained flat even as inflation has crept ahead. This has particularly affected those who live off their savings – generally retired people – and those who are trying to grow their savings, for example young people trying to scrape enough together for their first mortgage.
Theoretically even a modest rise in interest rates should see a better return on your savings but in the past banks have been noticeably slower to feed a rise in interest rates through to savers than they have been to increase charges on mortgage holders. Again, it pays to shop around.
However, ISAs have begun to inch slowly upwards. The average ISA now pays 1.02%. If that rises to 1.25%, someone with savings of around £10,000 will earn a return of £125 per year.