Cascade Commentary

We conduct regular analysis of our savings dataset - the largest available in the UK market - to ascertain whether banks and building societies are moving their interest rates in anticipation of a base rate increase. The Bank of England increased the base rate in late 2017 and there are expectations for a further increase of around 0.20% to take place in May 2018. 

Most savers hold their money with one of the Big Four providers - namely, Barclays, HSBC, Lloyds or RBS. These providers typically offer the lowest rates in the market for savers due to excess liquidity - i.e. they don't have a need for attracting new cash to their balance sheet. 

The Best Rates available for a new Personal saver to a provider at the start of the year ranged from 1.30% on Instant Access up to 2.55% on a 5 Year fixed term. Existing Personal savers to certain providers were able to enjoy loyalty bonus rates, particularly for shorter terms with Instant Access rates reaching 1.60%. The Best Rates available for Personal savers have not moved over the three months to the end of March 2018. Some fixed term bonds have increased on a 1 year, 3 year and 5 year terms by minimal amounts (circa 0.05% to 0.10%) but 4 year rates have increased by 0.17% as new products have been released. When compared with the Big Four, these market leading rates offer up to 1.35% more than what can be achieved by simply staying put. A new Personal saver holding cash on Instant Access could earn 0.25% with the Big Four. Assuming a £500,000 deposit, this equates to £1,250 annually. By allocating capital across providers, Personal savers could diversify their cash under the Financial Services Compensation Scheme (FSCS) while also increasing their earnings up to 1.30% - that's up to £5,250 per year!

A new Corporate saver in January earned 0.90% on Instant Access up to 2.20% on a 5 Year fixed term. Existing Corporate savers earned loyalty bonuses on shorter terms in the main, with a bonus of around 0.10% on Instant Access taking the overall rate earned to 1.00%. In comparison, the Big Four providers paid 0.45% on Instant Access for loyal Corporate savers and half to new Corporate savers with the Best Rates reaching 0.20%. On a £1,000,000 deposit, new Corporate savers could earn up to £3,500 by diversifying capital away from the Big Four. 

Charity savers tend to hold a lot of cash relative to other client types and more often than not, hold these funds with one of the Big Four providers. The Best Rates from these providers for new and existing Charity savers in January were a measly 0.06% up to £500,000 and 0.07% for £500,000 and above. In comparison, when including some of the smaller providers, new and existing Charity savers could earn up to 0.85% on Instant Access. On a £500,000 deposit, this equates to a monetary difference of £3,950 extra per year. Some providers have introduced loyalty rates for existing customers that have increased rates on a 30 day term for existing customers by up to 0.15% but rates for new Charity savers have remained flat since the start of the year.

Despite media coverage indicating the contrary, our intelligence indicates that most providers are waiting for more information from the Bank of England before increasing rates further. The Best Rates in the Market increased between September 2017 and January 2018 and have remained steady since, but this has not been seen with rates on offer from the Big Four. 

For savers presently sat with the Big Four providers (HSBC, Lloyds Bank, RBS or Barclays) rates continue to be significantly higher when newer banks are included in their dataset. To find out how much more you could be earning today and on an ongoing basis, do get in touch on 0191 481 3777 and we'll be happy to help.