What do lower interest rates mean for your money?

Getting your money working hard for you is really important when it comes to reaching your financial goals.

But in the fast-moving world we live in, it can feel hard to know where you’re at with your money at any one time, and whether it’s in the best possible place for your needs – especially when we’ve had such uncertainty with inflation and interest rates.

Currently, falling inflation means central banks are thinking more seriously about cutting interest rates. As things stand, the Bank of England are expected to make a first interest rate cut in either August or September, with the potential for more later in the year and into 2025.

This idea of rate cuts might have you wondering what comes next for your money. But I have some good news for you: Skipton could help you figure this out with a free My Money Review. More on that later – let’s get started by taking a look at what lower interest rates could mean for your savings and your mortgage, including what you can do to try and get the most from falling rates.

What do lower rates mean for your savings?

Last year interest rates on savings accounts rose rapidly, providing savers with some great opportunities. But how could interest rate cuts affect what’s on offer?

Well, it feels a bit like a case of the good, the bad and the ugly for savers.

  • The good: interest rates for savings accounts remain higher than what we’ve been used to in recent years. According to a Moneyfacts report from May 2024, nine in 10 savings accounts still beat inflation.
  • The bad: interest rates on offer are likely to be past their peak for now.
  • The ugly: the closer we get to the Bank of England making a rate cut, the sooner we expect interest rates on savings accounts to fall.

But just because interest rates are expected to drop doesn’t mean that you should give up on getting your money working harder. There are still plenty of options available to you – we offer a wide range of savings accounts for different goals.

As a starting point, take a look at the interest rate you’re currently receiving on your savings to see if you could get a better deal. Moving your money to a new savings account is much easier than you might think. It’s nice and simple to apply for one of our accounts online – plus you can also open many of our accounts through our mobile app.

Next, it’s worth thinking about whether you have room to save money that you don’t need immediate access to. If so, there may be some great opportunities to get this working harder for you.

For example, a Fixed Rate Bond account could be a great way of locking in a guaranteed interest rate for a set period. At Skipton, we have a range of Fixed Rate Bonds for you to check out – with these you’ll keep the interest rate on the account for the fixed term (for example, five years), no matter what other interest rates are doing.

It’s worth me mentioning that you usually can’t make withdrawals from these types of account. We also always recommend you have six months’ worth of expenses in an easy-access savings account to cover for any unexpected emergencies.

Investing in your future goals

That’s your short and medium-term needs covered, but what about your long-term goals? This is when we get onto those life changing moments – like saving towards retirement or leaving a stronger legacy for your loved ones.

For these types of goals, Financial Advice could help you to achieve higher returns than what a savings account could offer over the long-term. And this could make a difference to your financial future and personal goals. Find out more about why now might be a good time to invest.

Investing does involve taking risk with your money, and you’ll need to be willing to commit a part of your savings for at least five years.

For these reasons, it could be worth meeting with one of our expert financial advisers to better understand your options. And the great thing about speaking to us about your long-term goals is that it costs absolutely nothing to find out if we could help you or to hear our personalised recommendations. You’ll only be charged if you go ahead and act on our advice.

Financial advice is hard to find on the high street these days, unless you have over £100,000 to invest. We’re proud to be different. If you have at least £20,000 to invest – or £50,000 already in pensions and savings – we can provide expert advice. Our advice is also available if you can invest at least £500 a month.

Important Information

Our recommendations are likely to include stock market-based investments. These aren't like building society savings accounts. The value of your investments and any income can go down or up and you may get back less than you invested.

What do lower rates mean for your mortgage?

I also caught up with our mortgage expert, Umera Patel who recently starred in episode one of our mini series, Make Your Move. Here's what Umera had to say about what lower rates could mean for your mortgage.

“Last summer we watched mortgage rates surge to their highest level in 15 years. But the fact that interest rates are expected to fall means we should see mortgage rates come down too.

“However, it’s important to stress that we don’t expect them to fall back to the super low levels they were at in 2021 anytime soon – meaning if you haven’t remortgaged since rates rose, you should prepare for the likelihood of paying a higher rate than what you’re on now.

“To avoid any nasty shocks, the best thing you can do is to prepare well in advance. At Skipton, you can choose your next one in the few months before your current deal ends. And you’re not tied to it, meaning you can switch again ahead of your deal (if it hasn’t already been put in place) – for example, if rates were to fall in that time.

“If the idea of paying a higher mortgage rate is something which concerns you, it’s worth looking into things like your monthly expenses to check if there are any savings you could make to cover a potential rise in payments. You can also check out our monthly repayment calculator, which can help you to figure out how different interest rates might affect your monthly payments.

“And as always, if you’re wondering what’s best for you when it comes to remortgaging, a chat with one of our mortgage advisers could make all the difference.”

Free advice on your money

If you’re wanting more personalised advice on what lower rates could mean for your money, a chat about your finances will help you to find out more about your options. And we can help you with this through a free
My Money Review.

This is a relaxed conversation with one of our experienced colleagues to talk about your short, medium and long-term goals for your money. The chat takes around an hour and is very much led by you – at the end of it, we’ll provide you with a report with our recommendations on what we feel is best for you.

Don't just take our word for it. David, from Selby, tell us about his My Money Review:

"I got great advice. It’s one of the reasons I’m with Skipton Building Society. They offer good interest rates and I like their mutual values. A welcoming atmosphere, with trusted people available who can help me plan my finances is a winning combination."

After the chat there’s no pressure for you to do anything and we’ll take everything at your pace. You can even book another appointment if you want to chat with us again. We could also arrange for you to speak to one of our financial advisers to discuss things like investing and saving into a pension.

Book a My Money Review

If you can spare one hour to talk about your financial future and check if your savings are on track, a FREE My Money Review appointment could be just right for you.

Book a My Money Review