Millions of homeowners face mortgage misery after interest rates jumped for the fifth month in a row to a 13-year high of 1.25 per cent, which is this is the fastest that rates have risen over a six-month period since 1988.
Borrowers with variable-rate deals will see their bills soar by hundreds of pounds a year almost immediately.
Barclays, First Direct, HSBC and Virgin Money were among the first to reveal their variable – or tracker – rates would rise straight away. Santander is raising its rates from July and Nationwide from August.
The rise by HSBC yesterday was 0.5 per cent – double the increase by some of its rival lenders on the same day, and also twice the size of the Bank of England’s 0.25 per cent interest rate increase.
Around two million homeowners have a variable-rate mortgage that moves up or down in line with the Bank‘s base rate.
Someone with a £150,000 loan on their lender’s average standard variable rate will have to pay an extra £21 a month – or £252 a year, according to mortgage broker L&C.
The Bank of England increased interest rates for a record fifth time in a row to a 13-year high of 1.25 per cent yesterday
This is £96 a month – or £1,152 a year – more than before interest rates began rising from a record low of 0.1 per cent in December.
Those owing more will be hit harder, with repayments on a £450,000 loan up £3,456 a year compared with six months ago.
Experts also warn that interest rates could hit 3.5 per cent by the end of next year, piling yet more pressure on households already struggling to cope with the rising cost of living.
As lenders frantically pull their cheapest offers, the interest rate rise is also a major blow for 1.3million borrowers with fixed deals due to end this year.
For many borrowers, it will be the first time they have seen their monthly repayments increase when they come to remortgage.
Andrew Hagger, personal finance expert at Moneycomms.co.uk, said: ‘The latest hike in mortgage payments will be a hammer blow to households who are facing a tsunami of increased costs for essential goods and services.’
Fixed-rate deals for new customers are also becoming far dearer. The lowest two-year rates from the top ten lenders have trebled on average since October last year, according to L&C.
The average cheapest is 2.71 per cent, compared with 0.89 per cent nine months ago.
David Hollingworth, L&C associate director, said: ‘The rate at which mortgage rates have been moving has been astonishing. Many lenders have continued to make changes week in, week out, making it difficult for borrowers to keep tabs.
‘If fixed rates continue to climb, they could push through the 4 per cent barrier before the end of the year.’
Laura Suter, personal finance analyst at the investment firm AJ Bell, added: ‘Millions of households will never have experienced rates this high.
‘Someone who locked into record low mortgage rates in recent years would face a real shock if they came to refinance that debt today.’
It is also feared that rising rates could create more mortgage prisoners – those trapped in expensive deals and unable to switch – because many banks are factoring in soaring living costs when assessing how much homeowners can borrow.
Experts also warned that renters will feel the pain as many landlords start passing on higher loan costs.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: ‘If you are on a variable rate you might want to fix sooner rather than later. The longer you leave it, the more you’ll pay’.
Meanwhile, higher interest rates are expected to pour cold water on the booming property market and slow price growth.
There is a glimmer of hope for savers. But there are still no deals that come close to matching the 9 per cent inflation rate, which means savers’ cash will continue to be eroded in real terms.
Many major banks are also still dragging their heels when it comes to passing on rate rises.
Rachel Springall, finance expert at data analysts Moneyfacts, said: ‘Out of the biggest high street brands, some have passed on just 0.09 per cent since December.’
Rishi WON’T ride to the rescue on cost-of-living crisis: Ministers warn no cuts to Britons’ taxes until 11% inflation threat eases after Bank of England hikes interest rates and sounds alarm on stalling economy
- Britons face ‘tough times’ as inflation soars and interest rate raise mortgages
- Experts fear pound will remain weak amid soaring cost of living crisis
- The cost of putting food on the table set to rise by more than £500 a year
- Institute of Grocery Distribution said families will feel inflation this summer
After the Bank of England warned price rises will top 11 per cent this Autumn, the Chancellor made clear that splashing out more would ‘exacerbate’ the problem.
Communities Secretary Michael Gove echoed the view, insisting that the government could not act as it would in a ‘perfect world’.
And in a round of interviews this morning, business minister Paul Scully said any further changes to tax would wait until the Budget – which usually comes in November or December.
The Bank increased interest rates for a record fifth time in a row to a 13-year high of 1.25 per cent yesterday, predicting that the economy will go into reverse this quarter.
Experts are warning that rates could hit 3.5 per cent by the end of next year, piling more pain on families as policy-makers prioritise combating inflation by dampening activity and encouraging saving.
The Bank increased interest rates for a record fifth time in a row to a 13-year high of 1.25 per cent yesterday, predicting that the economy will go into reverse this quarter
Michael Gove warned the Government would not be able to help everyone hit by the ‘painful correction’ that was coming
However, rising rates also poses a major problem for the Government, which is sitting on a debt mountain of more than £2trillion.
In a letter to the Bank’s Governor Andrew Bailey, Mr Sunak said fiscal policy must remain ‘responsible’ and not ‘exacerbate’ inflation.
He wrote: ‘This is why, in responding to urgent cost of living pressures that people are facing, I announced a series of measures which are timely, targeted, and temporary to help households manage the squeeze on real incomes whilst not adding unnecessarily to inflation.’
In an interview with ITV, the Chancellor pointed to the lifting of the threshold at which employees start to pay national insurance in a few weeks as he insisted the ‘direction of travel is to reduce people’s taxes’.
But he signalled there is little chance of more tax cuts soon, telling ITV News: ‘I will make sure that I handle our borrowing and debt responsibly so that we don’t make the situation worse and increase mortgage rates more than they otherwise are going to have to go up.’
Communities Secretary Mr Gove later said he agreed with Mr Sunak that tax cuts should be shelved until inflation is brought down.
Asked if that would have to wait until 2024, Mr Gove told TalkTV: ‘The Chancellor has the right policy… He can’t spend all of the public money that many would wish to and which, in a perfect world, we’d like to’.
He added: ‘You’ve got to make sure that you balance the books at a government level’.
Mr Gove warned starkly: ‘There are inevitably tough times ahead for the UK and the global economy.’
He noted that interest rates have been low since the 2008 financial crisis, when they were dropped to encourage spending, adding: ‘It has meant that a correction has to come and that is painful.’
Mr Scully told Sky News that he was generally in favour of tax cuts, but dismissed the idea more would be announced before the Budget and pointed to huge Covid spending.
‘Come the next Budget he (Rishi Sunak) will have to look at the balance,’ he said.
‘There won’t be tax cuts now, taxes are dealt with in a Budget in the Autumn.’
The Bank of England’s monetary policy committee (MPC) yesterday said it was ready to ‘act forcefully’ if cost of living rises get further out of hand.
But it increased the base rate by only 0.25 percentage points, to 1.25 per cent – less than the 0.5 percentage-point lift many had hoped for.
The Bank is grappling with the quandary of whether to act aggressively against the cost of living crunch at the expense of economic growth.
While higher rates could tame rampant inflation, they may also halt Britain’s recovery from the Covid pandemic.
While higher rates could tame rampant inflation, they may also halt Britain’s recovery from the Covid pandemic
The rise in inflation is exceeding the Bank’s previous expectations. In May, officials said it would peak just above 10 per cent. Now it is expected to top 11 per cent in October – a level not seen in more than 40 years.
Susannah Streeter, of investment platform Hargreaves Lansdown, said: ‘Worries will ratchet up that, given inflation is set to soar to the eye-watering levels of 11 per cent, the Bank of England is going to be seriously behind the curve in attempts to bring it down.’
Andrew Sentance, a former member of the MPC, said: ‘As expected, the MPC edged interest rates up again but they’re not sending a decisive warning shot to signal they will do what it takes to bring down inflation.’
Laith Khalaf, of A J Bell, said many would take the Bank’s gradual approach to rate increases as a sign that it had ‘bottled it’.
The two million homeowners with variable rate mortgages and the 1.3 million borrowers with fixed deals due to end this year face significant hikes.
Laura Suter, personal finance analyst at investment firm A J Bell, said: ‘Someone who locked into record low mortgage rates in recent years would face a real financial shock if they came to refinance that debt today.’
ALEX BRUMMER: The Bank of England have been worryingly timid and got it wrong yet again… the rise should’ve been bolder, sending a powerful message of restraint
The contrast could not be greater. Faced with the prospect of rampant inflation becoming embedded in the US economy, this week America’s central bank slammed on the brakes.
With inflation soaring to a 40-year high, the Federal Reserve raised interest rates by three-quarters of a percentage point to up to 1.75 per cent: The biggest hike since 1994.
Here in Britain, however, the Bank of England has been worryingly timid. Even though peak inflation here is now forecast to reach 11 per cent this autumn, yesterday the Old Lady of Threadneedle Street moved interest rates up by just a quarter of a percentage point – to 1.25 per cent.
Yes, this is the highest rate we have seen since 2009. But, by failing to signal the inflation peril to consumers and businesses, the governor of the Bank, Andrew Bailey, and his colleagues on the Monetary Policy Committee risk two things: Fixing high inflation in the economy and an outbreak of ‘greedflation’.
This is when suppliers of goods and services – from petrol forecourts to food producers – use inflation as an excuse to raise prices more than they need to.
Bailey and the Bank have repeatedly been wrong on inflation, constantly having to raise projections.
When the furlough scheme ended last autumn, the Bank was so worried about a jump in unemployment, it neglected its main duty: To hold inflation to a 2 per cent annual target.
Any boss of a private sector organisation who missed targets so spectacularly would be out on their ear.
To their credit, three distinguished economists on the rate-setting committee did see the risk of uncontrolled inflation and voted decisively yesterday for a 0.5 per cent rise. But it was not enough.
As the cost of living has surged, Chancellor Rishi Sunak has pumped an extra £37billion into the economy this year to help people meet their energy bills. This should have given the Bank the headroom to raise interest rates without hammering national output.
Now the risk – especially given how restive the trade unions are becoming – is that pay chases inflation. This could create a 1970s-style ‘wage price spiral’ that would only worsen the problem. Inflation so stitched into the economy could take years to dissipate.
The Bank should have been bolder, sending a powerful message of restraint to households, employees and business. This is a badly missed opportunity – and a serious miscalculation.
VICTORIA BISCHOFF: Any rise in mortgage costs will feel like a hammer blow… the only crumb of comfort is that the hike wasn’t higher
Households up and down the country are wondering how much more bad news their battered budgets can take. The soaring cost of living means many are already struggling to make ends meet – and that’s before the average annual energy bill rises to a predicted £3,000.
So news that mortgage bills – the biggest monthly expense for most people – are also set to rocket will be a terrifying prospect. About two million homeowners with variable rate loans will see an almost immediate jump in their monthly repayments after yesterday’s interest rate increase.
But the real shock will come for those who locked into ultra-cheap fixed deals a few years ago that are soon due to end. And this will be a bitter blow for anyone who stretched themselves to buy a bigger house or who has borrowed extra to make home improvements. Some could well find that the bumper mortgage they could scarcely manage before is simply unaffordable at the rates available.
There is also a risk that, as lenders rethink how much homeowners can afford to borrow in light of rising bills, some could just be refused a new deal.
This would force borrowers to roll on their provider’s standard variable rate, which is even more expensive.
And this is just the beginning, with interest rates now predicted to reach as high as 3 per cent or even 3.5 per cent by the end of next year.
It doesn’t matter that home loan rates remain cheap by historical standards. Against a backdrop of rising broadband, council tax, energy, food, phone, petrol and water bills, any rise in mortgage costs will feel like a hammer blow. So while there has understandably been much criticism of the Bank of England’s decision not to raise the base rate faster to tame spiralling inflation, from the homeowners’ point of view, rising rates are worrying enough without a sudden, sharp hike.
Debt charities have already reported a surge in demand from frantic families forced to ration meals and heating.
Back-to-back interest rate rises are only going to intensify the squeeze on household finances. And it can’t be a coincidence that the City watchdog chose yesterday to reveal it had written to more than 3,500 lenders to remind them of their duty to support customers struggling with repayments.
The silver lining is that there is still time for homeowners (who meet their lenders’ stricter affordability rules) to protect themselves against future rate rises.
Yes, the record low deals of the past few years are long gone. But there are still good value fixed-rate offers available – and borrowers can reserve one up to six months in advance. They just need to move fast.
Bank of England raises base rate to 1.25% – its fifth hike in six months: What does it mean for mortgage borrowers and savers?
- First time since February 2009 that the base rate has risen above 1%
- Mortgage rates expected to rise after second biggest monthly increase this year
- Cheapest 2 and 5-year fixed rate mortgage deals now charging in excess of 2.5%
- Best savings deals also expected to improve with highest rate now paying 3.25%
- Many of the big banks have failed to pass on the base rate rises to savers
The Bank of England has upped the base rate for the fifth time since December as it attempts to suppress soaring inflation.
The base rate has risen by 0.25 percentage points from 1 per cent to 1.25 per cent, having been previously upped from 0.1 to 1 per cent during the previous four successive rises.
This is the first time since February 2009 that the base rate has been above 1 per cent, when it was heading downwards following the financial crisis in 2008.
Continued inflationary pressure is thought to be behind The Monetary Policy Committee’s decision to raise the rate once again.
However, some economists suggest it will do little to stem the cost of living rises triggered by the higher prices on food and materials coming from abroad and the soaring costs of energy.
It comes a day after the Federal Reserve in the US bumped up its base rate by 0.75 percentage points, to the range of 1.5 per cent to 1.75 per cent – the sharpest rise since 1994.
Savers will be hoping that the base rate rise will mean they get better rates on their savings accounts.
Most homeowners who have fixed rate mortgage deals won’t be affected immediately, but are likely to find remortgaging in future more expensive – depending on property price growth.
Those with variable rate mortgages are likely to see monthly costs rise imminently.
Why raise interest rates?
As of April, CPI inflation stands at 9 per cent, however, the Bank of England has now once again changed the forecast and expects it to peak at around 11 per cent by October.
The MPC voted 6-3 to increase base rate to 1.25 per cent – members in the minority preferred to increase it 0.5 percentage points to 1.5 per cent.
While the Bank of England can’t do anything about global supply problems or energy prices, it can change the UK’s single most important interest rate.
The base rate determines the interest rate the Bank of England pays to banks that hold money with it and influences the rates those banks charge people to borrow money or pay people to save.
By raising the base rate, it will hope to make borrowing more expensive and saving more lucrative for Britons.
This in theory should encourage people to spend less and save more and therefore help to push inflation down, by dampening the economy and the amount of money banks create in new loans.
Savers will be hoping that the base rate will inject further stimulus into the savings market, particularly given that at present not one savings account gets close to keeping up with inflation.
Mortgage borrowers will be preparing for further rate hikes, having seen rates rise substantially over the past eight months from the record lows seen in October.
What does it mean for my mortgage?
The rise in base rates has been pushing up the price of mortgages since last year, when they had reached record lows with some deals priced at below 1 per cent.
How this rise affects borrowers depends on the type of mortgage they have.
For those not on fixed rates the Bank of England decision brings another increase, the second this year, and even those on fixed rates will face increased interest rates when their term ends.
Mortgage holders with a discount deal, or a base rate tracker mortgage will see their payments increase immediately.
As rates have fluctuated over the past year fewer borrowers are choosing variable rates, opting instead for fixed mortgages as a security against the rises.
Those on their lender’s standard variable rate (SVR) will also likely see rates rises over the coming weeks.
It is thought that around 12 per cent of mortgages are currently on a standard variable rate, according to UK Finance.
Based on calculations by the trade association, this rate rise will see monthly interest payments for SVRs rise by an average of £15.94 a month to £226, for a mortgage interest rate of 3.31 per cent on an outstanding balance of £76,499.
Rachel Springall, finance expert at financial information service Moneyfacts, said: ‘Consumers are facing a cost of living crisis and the back-to-back rate rises are fuelling the mortgage market.
‘Borrowers who lock into a fixed deal can protect themselves from future rate rises, but those building a deposit may not be able to afford a mortgage as interest rates and living costs continue to climb.
‘Fixed rates are on the rise, with the average two-year fixed rate rising by almost 1 per cent since December 2021.
‘As the rate gap between the average two-year and five-year fixed rate has narrowed, fixing for longer may be a sensible choice.
‘Borrowers could even lock into a fixed mortgage for a decade if they are prepared to commit to such a lengthy fixed term.
‘Seeking advice is sensible to assess the abundance of deals out there to ensure borrowers find the most appropriate choice based on the overall true cost.’
|Rate hike||£150k mortgage||£250k mortgage||£400k mortgage|
|Credit: Totally Money & Moneycomms|
According to Moneyfacts, switching from a SVR to a fixed rate could significantly reduce someone’s mortgage repayment.
Based on their calculations the difference between the average two-year fixed mortgage rate and SVR stands at 1.66 per cent, and the cost savings to switch from 4.91 per cent to 3.25 per cent is a difference of approximately £4,418 over two years.
The rise of 0.25 rise on the current SVR of 4.91 per cent would add approximately £700 onto total repayments over two years.
Fixed-rate mortgages are overwhelming the favourite choice for mortgage holders with an estimated 75 per cent of residential borrowers using this type.
Those on a fixed rate will not immediately feel the effect of the rise, as they are locked into their existing rate until the term ends.
However, the number of fixed deals ending at any point this year is 1.3million and the rate hike will make it more expensive for those looking to remortgage.
According to Moneyfacts, a typical two-year fixed mortgage across all deposit sizes had an interest rate of 2.34 per cent in December last year which has now risen to 3.25 per cent and is likely to head higher after today’s rise.
On a £200,000 mortgage being repaid over a 25 years, that’s the difference between paying £881 a month and £975 a month.
If average two-year fixed rates were to rise by a further 0.25 percentage points in the aftermath of the base rate rise that figure would increase to £1,001 a month.
Likewise a typical five-year fixed mortgage had an interest rate of 2.64 per cent in December. This has now risen to 3.37 per cent and again, is likely to only head north.
Analysis by L&C Mortgages has shown that the typical cheapest two-year fixes offered by the ten biggest lenders now stands at more than triple the rates on offer last October, even before the latest rate rise.
|Mortgage type||Avg rate Oct 2021||Avg rate May 2022||Avg rate June 2022|
|Two year fixed rate||0.89%||2.36%||2.71%|
|Five year fixed rate||1.05%||2.46%||2.78%|
|Standard variable rate||3.82%||4.34%||4.51%|
|Source: L&C Mortgages June 2022|
David Hollingworth of mortgage broker L&C said: ‘Those that are in a fixed rate will be protected from the rises currently but should plan ahead as rates are rising rapidly.
‘It’s possible to secure a rate as much as six months before the end of a deal which could help get ahead of any further rate rises to come.
‘However those currently enjoying a low rate may have to adjust expectation when their deal comes to an end in the future.
‘There’s potential for borrowers to suffer some rate shock on the expiry of a current low rate and they find that the rate environment has changed.
‘If they are benefiting from a really low rate now they may even want to overpay to help reduce the mortgage for when they have to switch into a higher rate, although with the cost of living squeeze that will be easier said than done.’
What does it mean for my savings?
While it is potentially bad news for mortgage borrowers, the base rate rise will be welcomed by savers who have seen rock-bottom rates for years.
Were savers to see 0.25 percentage point rise passed onto them, it would mean receiving £50 more a year in interest based on a £20,000 deposit.
The four previous quickfire base rate rises have seen rates ticking upwards at some pace during the first half of the 2022.
The top of This is Money’s independent best buy tables have been a hive of activity, with new market leading rates to report almost every week.
The best easy-access deal now pays 1.52 per cent – more than three time more than was possible this time last year.
The best one-year fixed deal pays 2.6 per cent, whist the best two-year fix pays 3 per cent – the highest seen since early 2013 according to Moneyfacts.
|Type of account (min investment)||0% tax||20% tax||40% tax|
|BONUS accounts – Pay a bonus for the first 12 months or more. These are the rates including the bonus|
|UBL Bank (£2,000+)*||1.52||1.22||0.91|
|Cynergy Bank Online Easy Access 51 (£1) (1)||1.32||1.06||0.79|
|Yorkshire BS Internet Saver Plus 11 (£10,000+)||1.33||1.06||0.80|
|Al Rayan Bank Everyday Saver 2 (£2,500+)(3)||1.31||1.05||0.79|
|Marcus by Goldman Sachs (£1+) (2)||1.30||1.04||0.78|
|* Deal is exclusive via savings platform, Raisin UK. Signup via the link and deposit £10,000 or more and you’ll receive a £25 welcome bonus. You will need to claim via email for the £25 bonus to be paid.|
|(1) Rates includes a 1.02 percentage point bonus payable for the first 12 months|
|(2) Rate includes a 0.25 percentage point bonus payable for the first 12 months.|
|(3) This rate is the ‘expected profit rate’ under Sharia compliant accounts.|
However, whilst the best rates have improved markedly, most savers still have their cash languishing in accounts paying next to nothing.
There is little sign of this changing for those who choose to not move their cash to another deal.
The biggest high street banks including Barclays, HSBC, Halifax, Lloyds, NatWest and Santander have barely passed on any of the previous base rate rises to their easy-access savers – where the majority of savers keep their cash.
Since the first base rate rise in December last year, Barclays Bank has held its Everyday Saver at 0.01 per cent, while HSBC, Lloyds, Santander and NatWest have increased easy-access rates from just 0.01 per cent to 0.1 per cent.
TSB and Halifax offer savers 0.15 per cent for using their easy-access savings accounts, whilst Nationwide, announced on Tuesday that from July it will be increasing its easy-access deal by just 0.05 percentage points.
The Britain’s biggest building society will move from paying its loyal savers between 0.11 per cent and 0.15 per cent to paying between 0.16-0.2 per cent.
Rachel Springall, a finance expert at Moneyfacts, said: ‘Interest rates on savings accounts are on the rise, which is largely thanks to competition among challenger banks and building societies.
‘Loyal savers may not be getting the best deal and could be missing out on a top rate if they fail to switch.
‘Out of the biggest high street brands, some have passed on just 0.09 per cent since December 2021 and none have passed on all four base rate rises, which equate to 0.9 per cent.’
‘Savers would be wise to review the top rate tables as there have been notable improvements over the past few months.
‘The best deals today may not have a very long shelf life and some may require certain eligibility criteria to be met.
‘However, if savers are prepared to make the effort, they could stand to earn a much better return on their hard-earned cash than if they have their money stored with a big high street bank for convenience.’
How high will rates will go?
We’ve already seen some big milestones reached over the past few weeks and months.
Savers are flocking back to fixed bonds as one-year rates burst through the 2.5 per cent barrier to a seven-year high.
At the start of the year, the best one-year deal was just 1.36 per cent. But you can now earn a top 2.6 per cent from Atom Bank.
Longer term fix rates have also seen big improvements – albeit the gap between one year deals and five year deals is just 0.65 per cent.
Meanwhile, the best easy-access deal has jumped from 0.71 per cent to 1.52 per cent since the start of the year.
With inflation likely to reach 10 per cent and further base rate rises expected, along with intense competition amongst challenger banks it is hard to see how rates won’t continue on this same upward trajectory, at least for the foreseeable future.
|Type of account (min investment)||0% tax||20% tax||40% tax|
|Atom Bank (£50+)||2.60||2.08||1.56|
|Cynergy Bank (£10,000+)||2.57||2.06||1.54|
|Smartsave Bank (£10,000+)||2.91||2.33||1.75|
|Atom Bank (£50+)||2.90||2.32||1.74|
James Blower, founder of The Savings Guru said: ‘It’s impossible to predict where rates are heading exactly but they will continue to rise this year – I’m certain on that because I cannot see a single factor that will lead to rates falling.
‘We also have four new entrant banks who are authorised with restrictions and who will be launching in the second half of the year.
‘New entrants always price very competitively to attract new savers so this will only fuel the market further.
‘I think we will end the year with easy-access best buys around 1.6 to 1.7 per cent and a one year fixed deal nudging towards 3 per cent.’
Where should savers stash their cash?
With rate rises occurring each and every week at the top of the market, savers may feel cautious of switching due to the danger of missing out on a better deal in the near future.
With rates likely to continue moving upwards – driven by competition between challenger banks and further base rate rises, savers may be tempted to remain in easy-access deals so as to remain flexible.
However, the gap between the best one-year fix and easy-access account is now in excess of 1 percentage point.
Of course, given the cost of living squeeze, it’s all the more important to have some easily accessible money to act as a financial cushion to deal with unforeseen events.
However, for those who already have a financial cushion built up and are not planning on using their excess cash towards a large expenditure or investment in the near future, then fixed rate savings could make sense.
These free platforms not only offer cashback incentives that enable savers to leapfrog the best rates on the market, they also help savers to keep track of their accounts more easily and move money into better rates after signing up.
Raisin is currently offering a £25 welcome bonus to This is Money readers if they open a new Raisin Account via this link or any link originating from our website.
It offers savers the chance to boost their savings by £25 when they open and fund an account on its marketplace with a minimum of £10,000.
And for those with bigger pots, signing up to Hargreaves Lansdown’s Active Savings platform for the first time will get them between £20 and £100 cashback depending on how much money is put in.
Those putting in £10,000 will secure £20, whilst those putting in £80,000 or more will secure £100. However, the biggest percentage point rate boost on savings comes at £10,000.
Raisin is offering the pick of the rates at present.
A saver depositing £10,000 for the first time in its best one-year deal paying 2.55 per cent could essentially secure a return of 2.8 per cent after the bonus is added.
Its easy-access deal is also the market leader meaning savers wary of fixing their cash can effectively turn a 1.52 per cent return into 1.77 per cent if they take advantage of its exclusive offer.