Martin Lewis warns anyone with savings over imminent 'drop'

James Rodger
·2-min read
If you've got savings accounts, easy access accounts, variable accounts, expect them to drop by around a quarter of a percentage point over the next few weeks
-Credit: (Image: Reach Publishing Services Limited)


Martin Lewis has issued a warning to anybody with an open savings account - amid fears the interest rate could plunge. The BBC and ITV regular spoke out in the wake of the Bank of England base rate cut, which took place last Thursday.

He warned: “If you've got savings accounts, easy access accounts, variable accounts, expect them to drop by around a quarter of a percentage point over the next few weeks. You’ll be given notice, maybe the best buys won’t drop by that much because it’s been very competitive over the last few weeks so they might get dropped by 0.15 percentage points.

“And if you’ve got fixed rate savings, well they’re fixed. But the rate at which you can fix mirrors what’s going on with mortgages. It’s all on long term predictions of interest rates.” He added: “Reasonable notice, but it is a reasonable clause so doing it the next day is probably too swift but if you’ve got an online account and you’re notified with a week, it’s probably arguable that that’s reasonable.

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“Depending on the product and exactly what type you’ve got, those rates that are variable if they’re dropping will be dropping somewhere between the next couple of days and the next month.” The base rate is used by the Bank of England as a tool to control inflation (the rate at which prices rise). It has a target of 2% for the Consumer Prices Index (CPI) measure of inflation, which is set by the Government.

The latest figures show that CPI inflation fell to 1.7% in September 2024, its lowest level since April 2021. Paul Dales, chief UK economist for research firm Capital Economics, said: "We no longer think rates will be cut quicker in the second half of 2025 and we now think rates will fall only as far as 3.5% in early 2026 rather than to 3%. Note this change is driven by the UK Budget and not the US election."

Susannah Streeter, head of money and markets at financial service firm Hargreaves Lansdown, added: "If the dollar continues to strengthen, it could increase the costs of goods imported into the UK, adding to inflationary pressures. This means that the Bank is likely to go a bit slower than previously expected in bringing in rate cuts. A move below 4% by the end of next year looks more unlikely, but a lot can change between now and then."

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