By Chris Dorrell
HSBC UK is boosting the interest rates on some savings accounts with increases of up to 0.75 percentage points, the bank has announced.
The increases will come into effect next week, on Thursday June 8.
They include a 0.75 percentage point increase on the bank’s mysavings and premier savings youth accounts, taking rates to 5.00 per cent.
The rate on HSBC’s online bonus saver instant access account, for balances up to £10,000, will rise by 0.50 percentage points to 4.00 per cent. The rate on balances over £10,000 increase by 0.30 percentage points to 2.30 per cent.
The bank is also making increases of up to 0.50 percentage points on its Isa range.
And its one-year, fixed-rate saver increases by 0.40 percentage points to 4.40 per cent, with a two-year, fixed-rate saver increasing by 0.35 percentage points to 4.45 per cent.
Pella Frost, HSBC UK’s head of everyday banking, said: “We know that having a savings habit helps build financial resilience and means that you’re better placed to handle any disruption.”
On Thursday, First Direct announced savings rate increases that will also take place from June 8.
Among the increases, a cash Isa rate will rise from 2.30 per cent to 2.50 per cent.
This follows the launch this week of First Direct’s one-year, fixed-rate saver account, at a rate of 4.60 per cent.
As well as increasing rates on some accounts, First Direct is still offering seven per cent on its regular saver account.
Concerns raised
Concerns have been raised about some longstanding savers languishing on low rates as the Bank of England base rate rises and people have been urged to ditch and switch if they are sitting a poor deal.
The Treasury Select Committee and consumer group Which? have been among those highlighting the issue and pressing banks to take action.
Bank of England figures released this week showed that Isa savings received a record £9bn boost in April, as the new tax year got under way.
There were suggestions that this could be due to savers being attracted by improving rates, wanting to shelter more of their money from the taxman and the desire to shore up their money at a time of economic uncertainty.
Savings rates have been improving at a time when some mortgage deals have vanished from the market in recent weeks amid fluctuating swap rates, which underpin fixed-rate mortgages.
Could savings rates be increased more?
Some experts have suggested that mortgage rates could tick upwards amid expectations that the Bank of England base rate will need to rise higher than its current level of 4.5 per cent.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk said: “HSBC’s rate increases will be welcome news for their loyal customers, and the new rates across easy access, regular savings are competitive in the present market. The mysavings children’s account will pay five per cent, one of the best returns in its sector.
“As a whole, the savings market has been blessed by rate increases thanks to a combination of the Bank of England rate rises and competition.
“Away from the biggest banking brands, challenger banks continue to jostle for table-topping positions to entice savers’ deposits, so it’s wise to keep a close eye on the moving market.
“Those savers who have not reviewed their savings pots for a few months should be encouraged to do so, as where a top rate on easy access accounts of one per cent could not be acquired at the start of 2022, savers would now find three per cent or more as a competitive return in the present market on offer from various providers.
“As interest rates continue to rise, it’s uncertain whether savers would be content to lock their cash away for more than a year, particularly if they feel more improvements could surface or if they need the reassurance of dipping into their savings pot.
“Spreading cash across both easy access accounts and short-term fixed to secure a guaranteed return could be a wise move to get the best of both worlds.
“However, savers who are comparing easy access accounts must be mindful that not all of them allow unlimited withdrawals and, in some cases, heavy bonuses can apply for just 12 months – so it’s wise to make a note to switch before they expire.”
Ms Springall said notable deals on the market include an easy access account from Hanley Economic Building Society at 4.50 per cent.
Teachers Building Society and Marsden Building Society are offering variable cash Isa rates of 4.00 per cent, meanwhile, according to Moneyfactscompare.co.uk.
NatWest and RBS also have regular saver accounts offering 6.17 per cent interest, according to Moneyfacts’ “best buy” tables.
Press Association – Vicky Shaw
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