When will interest rates rise for savers?

Interest rates on UK savings accounts saw a rapid rise in 2023, after the base rate peaked at its highest level since 2008, and it was a similar story in mainland Europe, with savings rates gradually increasing in 2023 following eight long years of ECB-set negative interest rates. 

We’ve seen savings rates in the UK slowly fall again since then, with the base rate cut to 3.75% in December 2025. So, what’s next for the UK? We look at the savings rate forecast for 2026 and beyond.

The information provided here is for informational and educational purposes only and does not constitute financial advice. Please consult with a licensed financial adviser or professional before making any financial decisions. Your financial situation is unique, and the information provided may not be suitable for your specific circumstances. We are not liable for any financial decisions or actions you take based on this information.

Interest rates were cut to 4.5% in February 2025. Despite the Bank of England holding this rate in March 2025, analysts predicted between two and four further rate cuts in 2025. The first of these came to pass in May 2025, with the base rate cut to 4.25%. A subsequent cut to 4% occurred in August 2025. In September 2025, the BoE's Monetary Policy Committee voted to hold the base rate at 4%. They again held the base rate at 4% in November 2025, albeit by a much closer 5-4 vote margin. The fourth and final cut of the year occurred in December 2025, with the base rate reduced to 3.75%.

2025 ended with a fourth cut of the year, with the Bank of England's Monetary Policy Committee reducing the base rate to 3.75%. Investors predict one or two further cuts in 2026, with the first anticipated for April 2026 and a second potentially taking place in November 2026. These are just predictions, however, and the ever-changing economic outlook may affect how many cuts (or rises) the MPC enact in 2026.

The next interest rate decision is on 5 February 2026.

The MPC reviews and announces the base rate eight times a year (approximately every six weeks). You can view the upcoming dates for 2026 on the BoE website.

The best savings account for you will depend on your personal circumstances and how much flexibility you will require. However, some of the highest interest rates can be found on fixed rate bonds. Regular savings accounts often also offer high interest rates, but these come with restrictions, like the amount of money you can deposit per month.

The direction of UK savings interest rates in 2026 will depend on a number of factors, including inflation, interest rates, and economic growth.

2025 saw inflation rise and fall numerous times, finally settling at 3.2% by the end of the year. Inflation was 3% in January 2025, although there was a subsequent decrease to 2.8% in February, and a further decrease to 2.6% in March. This trend was reversed in April 2025, however, with an increase to 3.5% (later revised to 3.4%), then to 3.6% in June. Inflation increased further to 3.8% in July 2025, a rate which subsequently held throughout August and September 2025. Inflation decreased to 3.6% in October 2025, before dropping further to 3.2% in November 2025. 

Experts expect inflation to continue falling in 2026, with forecasts suggesting it will fall to around the Government's target of 2% by mid-2026. There are many factors that impact inflation, however, including many that are hard to predict.

If the UK economy experiences a recession, banks may be less likely to offer high interest rates on savings accounts, as they will be more focused on lending money to businesses and consumers rather than attracting deposits.

*https://www.bbc.com/news/articles/c0lzj3g77gpo

Whether or not you should fix your savings now or wait depends on your individual circumstances and financial goals, but with interest rates already falling, now could be the ideal time to lock your money in. Longer-term savings accounts, for example 2 or 3 year fixed rate bonds, are an attractive option for savers as they often guarantee good returns.

Another thing to consider is how long you plan to keep your savings fixed. If you know you’ll need access to your money in the short term, then fixing your savings for less than a year may be a good option for you. However, if you are saving for a long-term goal, such as retirement, then you may want to consider fixing your savings for a longer period of time. This will give you more certainty over how much interest you will earn over the long term.

Ultimately, the decision is a personal one. There is no right or wrong answer, and the best decision for you will depend on your individual circumstances and financial goals.

Regardless of what happens to the savings interest rate, there’s never a bad time to save. To find the best savings account for you and compare interest rates on savings accounts, register for a Raisin UK Account and log in to apply.