NatWest has increased interest rates across savings accounts, offering savers higher returns amid the current period of high inflation eroding Briton’s spending power. From NatWest regular savers to cash ISAs, up to nine savings accounts will be impacted by the new rate changes.
The Digital Regular Saver will continue to pay a market-leading Annual Equivalent Rate (AER) of 6.17 percent on savings up to £5,000, and interest above £5,001 will rise from 0.65 percent to one percent.
Other accounts will see rates rise by as much as one percent in some cases.
The NatWest Flexible, Instant and Primary Savings accounts will all pay new interest rates of one percent on savings from £1 to £24,000, while interest paid on funds up to £99,000, and £1million and over will increase to pay an AER of 1.66 percent, and 2.02 percent, respectively.
The NatWest Instant Access ISA will pay an AER of one percent, up from 0.65 percent, on savings up to £24,999. The rate will rise again to 2.25 percent for savings over £25,000.
The NatWest First Saver and the Revolve Account will now pay AERs of 2.27 percent, up from 2.02 percent, on funds over £1.
The Instant Access Saver will pay an AER of one percent, up from 0.65 percent, on savings over £1, while the Savings Builder will now pay an AER of 2.02 percent on funds up to £10,000, after which a one percent AER will be applied on the rest.
The NatWest Fixed Rate Savings account interest rates have also increased to four percent gross rate for the One Year Issue, and 4.10 percent for the Two Year Issue.
The interest rate changes came into effect on March 21, 2023.
The rate changes come ahead of tomorrow’s Bank of England Base Rate review meeting, which will determine whether the Base Rate will rise again to help stem the UK’s spiralling inflation rate.
The Bank of England Base Rate, which is currently resting at a 14-year high of four percent, has been a large influencer of interest rates across savings products, as high street banks move to reflect the higher rate across their own services.
While many analysts were anticipating a Base Rate plateau after January’s modest inflation rate drop to 10.1 percent, the Consumer Price Index (CPI) report today shows rates have crept back up again in the year to February 2023 to 10.4 percent.
This could see the Bank of England move ahead with a predicted 0.25 percent to 0.5 percent increase as predicted, which could have an increasingly positive impact on savings rates to come.
Oliver Rust, head of product at independent inflation data aggregator, Truflation, commented: “Clearly, as [Jeremy] Hunt has said, inflation at this level is extremely damaging to the economy and while a global banking crisis is also a threat, tackling domestic inflation will likely come first. We now expect the BoE to hike interest rates by at least 50 basis points, taking the Base Rate to 4.5 percent.
“With the US Federal Reserve announcing its interest rate decision today, there has perhaps not been a more important week for global policymakers in recent memory. Both the BoE and the Fed are faced with very tough choices in overheating, yet extremely fragile economies. The speedy increase of interest rates has caused this latest banking wobble, which both Central Banks are cognisant of.”
Mr Rust continued: “Neither, however, are going to be able to take their respective feet off the gas in terms of rate hikes without seeming to favour markets over consumers. And indeed, as we have seen today, both still face significant domestic inflationary challenges. Moreover, the European Central Bank has already hiked, setting somewhat of a precedent.”
He added: “Central Banks are now locked in a very delicate balancing act and markets will be teetering on the edge of their seats waiting for those key decisions today and tomorrow.”
