Figures in this article come from the Bank of England's interest rate statistics and Moneyfacts' published market averages, captured on 28 September 2026. They describe averages across the accounts each source tracks, which may not cover every account on the market. Individual account rates vary and change often.

Savings rates in the UK have gone through big swings since 2008. They fell to very low levels for more than a decade, rose sharply in 2022–23 and eased in 2024–25. In 2026, fixed rates rose again ahead of the Bank Rate rising in November 2026. This article explains what drives those changes.

Savings rates: a short history

After more than a decade of historically low rates, the Bank of England raised the Bank Rate 14 times between December 2021 and August 2023, taking it from 0.1% to a peak of 5.25%. That pushed savings rates to their highest levels in many years. The Bank began cutting in August 2024 and reached 3.75% in December 2025. On 5 November 2026 it raised the rate to 4%, its first increase since August 2023, as the Middle East conflict pushed up energy prices and inflation.

Why did savings rates fall so far after 2008?

There are a few reasons why savings rates fell so much over the financial crisis. Let's take a look at them.

Bank Rate cuts. The Bank of England sets Bank Rate, the interest rate it pays on reserves that banks hold with it. Bank Rate influences the rates banks charge and pay across the economy, including on savings. From 2009 to 2021 it stayed between 0.1% and 0.75%.

Quantitative easing (QE). From March 2009 the Bank created money digitally, as central bank reserves, and used it to buy bonds, mostly UK government bonds. It started with £75 billion, and purchases eventually totalled £895 billion (Bank of England). QE was designed to lower longer-term interest rates across the economy.

Funding for Lending. In July 2012 the Bank of England and HM Treasury launched the Funding for Lending Scheme. It gave banks and building societies access to cheaper funding if they kept up lending (Bank of England). With cheaper funding available, banks had less need to attract savers' deposits with higher rates. The scheme has since closed to new drawdowns.

What's moving savings rates in 2026?

Fixed rates follow expectations, not just today's Bank Rate. Providers price fixed-rate savings with an eye on market interest rates (such as swap rates), which reflect where investors expect Bank Rate to go. In its September 2026 minutes the Bank of England reported that UK short-term market interest rates had risen and were pricing a peak of around 4.9% by the end of 2027. It also noted that the perceived probability of near-term increases in Bank Rate had risen. (Then, the Bank Rate rose to 4% in November 2026.)

That helps explain why average fixed savings rates rose in 2026:

• The Bank of England's average rate on two-year fixed cash ISAs (series IUMZID2) was 3.67% in February 2026 and 4.41% in August 2026.

• The average effective rate paid on individuals' new time deposits (mostly fixed-term accounts) was 3.67% in February 2026 and 4.21% in July 2026 (Bank of England Money and Credit, July 2026).

• Moneyfacts reported that the average one-year fixed bond paid 4.28% in September 2026, up from 4.23% in August. It was the sixth monthly rise in a row (Moneyfacts, 10 September 2026).

Easy-access rates have not followed. Moneyfacts' average easy-access rate was 2.53% in September 2026, unchanged for three months. The Bank of England's average rate on the existing stock of individuals' sight (instant-access) deposits was 1.65% in July 2026, down from 1.72% in February 2026. Providers set variable rates themselves and don't have to pass on changes in market rates or Bank Rate.

Inflation. CPI inflation was 3.1% in the 12 months to August 2026, up from 2.9% in July (ONS). The Bank of England said in September 2026 that inflation is likely to rise further over coming quarters, partly because of higher energy prices. Its staff projection was slightly above 4% in early 2027, which is a projection and not a certainty. The Bank's target is 2%. Inflation matters to savers because it reduces what savings can buy. For example, an account paying 4.28% a year while prices rise 3.1% gives a real return of about 1.1%. An account paying 2.53% would lose about 0.6% a year in real terms.

Quantitative tightening. Since February 2022 the Bank has been reducing the stock of bonds it bought through QE, and in September 2026 the Monetary Policy Committee set out the next stage of that process (Bank of England).

Tax and protection: facts to check before choosing an account

• Personal Savings Allowance: basic-rate taxpayers can earn £1,000 of savings interest a year tax-free, higher-rate taxpayers £500 and additional-rate taxpayers £0. A starting rate for savings of up to £5,000 may also apply if your other taxable income is under £17,570 (GOV.UK).

• ISAs: the annual ISA allowance is £20,000 for 2026/27. From 6 April 2027, the amount under-65s can pay into cash ISAs each year is due to fall to £12,000 (GOV.UK).

• FSCS protection: eligible deposits are protected up to £120,000 per person per authorised bank or building society. Brands that share a banking licence share one limit (FSCS).

Fixed-rate accounts usually restrict or charge for early access, so the terms of each account matter as much as the rate.

Savings accounts FAQ

What happens to savings rates when Bank Rate changes? Changes in Bank Rate, and in what markets expect Bank Rate to do, tend to feed through to savings rates, but not evenly. Fixed rates respond to market expectations and can move before Bank Rate does, as they did in 2026. Variable rates are set by each provider, and some providers pass on changes more slowly or not at all. Market sentiment may move savings rates ahead of (and in anticipation of) changes to the Bank Rate.

How can I tell whether my savings rate has changed? Providers must tell you about changes to your rate. You can also check your latest statement or app. Comparing your rate with published market averages, such as those from the Bank of England or Moneyfacts, shows how it compares with what's available elsewhere.

ClearScore doesn't give financial advice. The information in this article is for general guidance. It doesn't cover every savings account on the market, and other accounts may be better suited to your circumstances.