UK savings rates could be about to turn – here’s why

Competition between UK banks for savers’ cash has pushed rates above the market benchmark for the first time in months, according to Shawbrook Group.

The specialist lender told investors on Thursday (6 August) that competitive pressure in the retail savings market has moved rates above SONIA – the overnight benchmark that tracks close to the Bank of England’s base rate – and has begun to influence what banks pay for new money in parts of the market.

Shawbrook expects modest upward pressure on its own cost of deposits if the trend continues.

The bank paid an average of 4.4% across its funding in the first half of 2026, down from 5% a year earlier, as savings rates fell in step with base rate cuts through 2025.

Two forces are driving the shift. Shawbrook points to volatility in swap rates, which lenders use to price fixed products, keeping the easy access market highly competitive at a time of record product availability.

It also expects ISA reform to change how customers split their money, sharpening competition from investment providers as more cash looks for a tax-efficient home.

Savers are already moving towards fixed rates over easy access accounts, according to the bank, prioritising a guaranteed return over the freedom to withdraw.

Shawbrook’s own deposit base grew to £18.80 billion by the end of June, up from £18.35 billion in December.

Much of that comes through its digital platform, with the rest raised through partnerships and comparison platforms – its Whiteaway Laidlaw brand has taken in more than £2 billion through easy access accounts launched with three partners.

The bank expects aggregator platforms bringing together products from multiple providers to take a larger share of the savings market. Its base case assumes the bank rate stays at 3.75% for the rest of 2026 before falling to 3.25% next year.

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