A wave of interest rate hikes are being carried out by high street banks and building societies amid the ongoing rise in the cost of living. The latest financial institution to do this is Yorkshire Building Society, which is increasing the rate of its existing variable rate savings accounts by up to 0.50 percent.
With this move, savers will get at least a 2.55 percent rate on their savings, with the minimum rate for on sale accounts being raised to 2.55 percent.
Savings accounts affected by this boost from the building society will transition to the higher interest rate automatically from January 17.
This new rate will be passed on to the majority of customers who have a member loyalty savings account.
In the past 12 months, Yorkshire Building Society has passed on rate increases to its customers seven times.
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Chris Irwin, the director of savings at Yorkshire Building Society, shared why the financial institution is helping savers in this way.
He explained: “Our decision today to make further increases to our accounts continues to reflect our mutual ethos of putting our members first.
“Increasing rates by up to 0.50 percent on both our on-sale accounts and nearly all of our existing variable rate savings book, including the majority of our member loyalty savings accounts – continues to reflect our purpose of supporting our savers.
“Passing the bank rate increases on to our savers also demonstrates our commitment to delivering value to our members.
“We try very hard to offer our members competitive rates on their savings, maintaining an average interest rate on our accounts which has been consistently higher than the market to reward their loyalty and in turn support their financial resilience in the current financial climate.”
The latest interest rise from Yorkshire Building Society comes as the most recent Consumer Price Index (CPI) rate of inflation has hit 10.7 percent.
One of the consequences of rampant inflation is that returns for savers are severely diminished, which may lead to people not using their savings accounts.
In an attempt to rein in inflation, the Bank of England’s Monetary Policy Committee (MPC) has made the decision to raise the nation’s base rate multiple times over the past year.
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As it stands, the base rate is at 3.5 percent and this is being passed onto customers by institutions, such as Yorkshire Building Society.
Within the next year, financial analysts believe inflation will be nearly half the amount it is now which will likely see interest rates drop.
As a result of this, interest rates could fall within the next couple of months which will see savers see less of a favourable return.
Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, warned that the current competitive interest rates may not be around much longer.
On inflation falling, Ms Coles said: “For savers, the news is less positive, because those lower rate expectations have already seen some of the most competitive fixed rate savings deals pulled, so we’re likely to see these ease off as we head further into 2023.
“However, the good news is that with inflation forecast to be around five percent by the end of next year and under two percent in 2024, there’s a chance that the best two-year fixes could still beat inflation.”
The next announcement by the Bank of England’s MPC regarding interest rates will be February 2, 2023.
The Office for National Statistics will release the figures for inflation in December 2023 on January 18, 2023.