Santander has announced it will increase the interest rate of certain savings accounts next week.
From August 15, savings products that are linked to the Bank of England’s base rate will rise by 0.25 percent. The affected products in question are Santander’s Rate for Life and Good for Life savings accounts.
Since February 2022, the Bank of England has hiked the UK’s base rate 14 consecutive times and is now at 5.25 percent.
This has been carried out in an attempt to mitigate the damage being done to the economy due to the country’s high inflation rate, which is currently at 7.9 percent.
As of today, the interest rate for Santander’s Rate for Life ISA is sitting at five percent for customers.
However, this will be raised to 5.25 percent to match the central bank’s base rate as of August 15.
In comparison, the bank’s Good for Life savings account pays an interest rate of 5.25 percent for savers with an account balance of £1,000+.
From next week, this will be increased to 5.50 percent. Those with account balances of £1+ will continue to receive a rate of one percent.
Lucinda O’Brien, an expert at money.co.uk, wanted that savers need to do more to make their money go far in times of high inflation.
She explained: “The Bank of England interest rate can influence all other interest rates as it tries – or, in recent months, fails – to control inflation.
“With the latest rate hike and inflation still high, it is not looking like the situation is going to improve any time soon, so it is important to adjust and build a savings pot to help get through these difficult times and still achieve your long-term financial goals.
“Despite all of the problems high-interest rates have brought, there is somewhat of a silver lining in that it has also influenced an increase in average savings rates, with Bank of England ISAs jumping from 0.5 percent to 2.51 percent in the last year, as well as fixed-rate bonds increasing from 0.73 percent to 3.23 percent.”
Outside of these savings interest rate hikes, Santander also confirmed changes to its line of mortgage products.
All Santander and Alliance & Leicester tracker mortgage products linked to the Bank of England’s base rate will rise by 0.25 percent from the start of September 2023.
Among the affected products is the bank’s Follow-on Rate (FoR) which will increase to 8.5 percent.
It should be noted that Santander and Alliance & Leicester Standard Variable Rates (SVRs) will continue to be unchanged at 7.50 percent.