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Savers face falling returns despite inflation outlook

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Caitlyn Eastell, Apprentice Press & PR Assistant
Caitlyn Eastell, Personal Finance Analyst 01603 476169 Email Caitlyn
21/01/2026
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Savers face falling returns despite inflation outlook

A more positive inflation outlook proves to be a double-edged sword, bringing relief for borrowers but strain for savers, Moneyfactscompare.co.uk analysis can reveal.

Savers face falling returns despite inflation outlook

A more positive inflation outlook proves to be a double-edged sword, bringing relief for borrowers but strain for savers, Moneyfactscompare.co.uk analysis can reveal.

Mortgages

  • Since the previous inflation announcement, many lenders have cut fixed rates, as a result the Moneyfacts Average Mortgage rate has fallen from 4.89% to 4.83%.
  • Meanwhile, the average two-year fixed rate has fallen from 4.82% to 4.77%. The average five-year fixed rate has fallen from 4.90% to 4.87%.
  • In December 2025 the average two-year variable tracker rate was 4.66%. A borrower with a ‘typical’ £250,000 loan over 25 years could expect monthly repayment of around £1,400. After the base rate cut, borrowers on a variable rate deal could now be £30 better off on average (January 2026, 4.44%).

Caitlyn Eastell, Personal Finance Analyst at Moneyfactscompare.co.uk, said:

“Last year was a notable time for the mortgage market, with lenders taking a renewed focus on their affordability restraints. Across the calendar year, fixed rates dropped significantly, the average two-year fell from 5.48% to 4.83% while the five-year fell from 5.25% to 4.91%. Hopefully this positive momentum can carry on long into the new year. Millions of borrowers are due to refinance this year and, while sticky inflation may limit the pace at which the Bank of England can make cuts, borrowers on tracker mortgages may already be seeing the positive impacts from the most recent change; they could already have a £30 reduction to their monthly repayments. However, those currently locked into a fixed rate may still be feeling some strain.”

 

Mortgages

  • Since the previous inflation announcement, many lenders have cut fixed rates, as a result the Moneyfacts Average Mortgage rate has fallen from 4.89% to 4.83%.
  • Meanwhile, the average two-year fixed rate has fallen from 4.82% to 4.77%. The average five-year fixed rate has fallen from 4.90% to 4.87%.
  • In December 2025 the average two-year variable tracker rate was 4.66%. A borrower with a ‘typical’ £250,000 loan over 25 years could expect monthly repayment of around £1,400. After the base rate cut, borrowers on a variable rate deal could now be £30 better off on average (January 2026, 4.44%).

Caitlyn Eastell, Personal Finance Analyst at Moneyfactscompare.co.uk, said:

“Last year was a notable time for the mortgage market, with lenders taking a renewed focus on their affordability restraints. Across the calendar year, fixed rates dropped significantly, the average two-year fell from 5.48% to 4.83% while the five-year fell from 5.25% to 4.91%. Hopefully this positive momentum can carry on long into the new year. Millions of borrowers are due to refinance this year and, while sticky inflation may limit the pace at which the Bank of England can make cuts, borrowers on tracker mortgages may already be seeing the positive impacts from the most recent change; they could already have a £30 reduction to their monthly repayments. However, those currently locked into a fixed rate may still be feeling some strain.”

 

Savings

  • The Consumer Price Index (CPI) rose to 3.4% during December, from 3.2% in November. The Bank of England’s projection rate for inflation during Q4 2026 is 2.5%.
  • The Moneyfacts Average Savings Rate currently sits at 3.33%, which is lower than inflation, so it is essential that savers shop around to avoid losing money in real terms.
  • There are currently 1,406 savings accounts that beat inflation* (116 easy access, 130 notice accounts, 95 variable rate ISAs, 352 fixed rate ISAs and 713 fixed rate bonds).
  • In January 2025, there were 1,597 deals that could beat CPI which was then at 2.5% (December 2024 CPI) and in January 2024, there were 967deals that could beat CPI which was at 4.0% (December 2023 CPI).

Caitlyn Eastell, Personal Finance Analyst at Moneyfactscompare.co.uk, said:

“January is the ideal time for savers to set new financial goals and to check if their savings are working as hard as they can. While there has been a promising jump to short-term fixed bonds, this doesn’t follow the trend as most of the top rates have dropped month-on-month, so it is crucial that savers are fast to react to attractive deals, otherwise they face missing out.

“Over the past two years, savers who have selected the top one-year bond each year are around £50 worse off compared to those who locked away £10,000 for two years upfront. Although the shortest terms typically look the most attractive, savers were protected from cuts for longer with a two-year bond. When interest rates are near their peak, committing to longer terms can outperform ‘rate-hopping’.

“Inflation is set to fall this year, reaching its target around mid-2026. This will be promising news for savers’ returns as they could grow in ‘real’ value. However, pair this with tumbling savings rates and savers may find themselves in a similar situation where their accounts are struggling to keep pace. While there is no immediate threat of a base rate cut, with a change unlikely to happen in February, savers might get some reprieve but if inflation does indeed ease to its target, this could encourage the Bank of England to make cuts.”

Savings

  • The Consumer Price Index (CPI) rose to 3.4% during December, from 3.2% in November. The Bank of England’s projection rate for inflation during Q4 2026 is 2.5%.
  • The Moneyfacts Average Savings Rate currently sits at 3.33%, which is lower than inflation, so it is essential that savers shop around to avoid losing money in real terms.
  • There are currently 1,406 savings accounts that beat inflation* (116 easy access, 130 notice accounts, 95 variable rate ISAs, 352 fixed rate ISAs and 713 fixed rate bonds).
  • In January 2025, there were 1,597 deals that could beat CPI which was then at 2.5% (December 2024 CPI) and in January 2024, there were 967deals that could beat CPI which was at 4.0% (December 2023 CPI).

Caitlyn Eastell, Personal Finance Analyst at Moneyfactscompare.co.uk, said:

“January is the ideal time for savers to set new financial goals and to check if their savings are working as hard as they can. While there has been a promising jump to short-term fixed bonds, this doesn’t follow the trend as most of the top rates have dropped month-on-month, so it is crucial that savers are fast to react to attractive deals, otherwise they face missing out.

“Over the past two years, savers who have selected the top one-year bond each year are around £50 worse off compared to those who locked away £10,000 for two years upfront. Although the shortest terms typically look the most attractive, savers were protected from cuts for longer with a two-year bond. When interest rates are near their peak, committing to longer terms can outperform ‘rate-hopping’.

“Inflation is set to fall this year, reaching its target around mid-2026. This will be promising news for savers’ returns as they could grow in ‘real’ value. However, pair this with tumbling savings rates and savers may find themselves in a similar situation where their accounts are struggling to keep pace. While there is no immediate threat of a base rate cut, with a change unlikely to happen in February, savers might get some reprieve but if inflation does indeed ease to its target, this could encourage the Bank of England to make cuts.”

 

Savings market analysis

Top savings deals at £10,000 gross

17-Jan-24

15-Jan-25

17-Dec-25

Today

Easy access account

Ulster Bank – 5.20%

Chase – 4.89%

Sidekick – 4.43% (includes bonus)

Chase – 4.41% (includes bonus)

Notice account

FirstSave – 5.40% (90-Day)

BLME – 4.85% (90-day)

Earl Shilton BS – 4.50% (180-Day)

The Stafford BS – 4.61% (180-Day)

One-year fixed rate bond

SmartSave – 5.31%

Vida Savings – 4.77%

Kent Reliance – 4.51%

Marcus by Goldman Sachs® – 4.55% (payable on maturity)

Two-year fixed rate bond

Union Bank of India (UK) Ltd – 5.15%

Atom Bank – 4.70%

Kent Reliance – 4.42%

LHV Bank – 4.24% (payable on maturity)

Three-year fixed rate bond

Al-Rayan Bank – 4.86%**

SmartSave – 4.62%

UBL UK – 4.39% (payable on maturity)

UBL UK – 4.32% (payable on maturity)

Four-year fixed rate bond

Bank of Ceylon (UK) Ltd (Raisin UK) – 4.55% (payable on maturity)

UBL UK – 4.54% (payable on maturity)

UBL UK – 4.54% (payable on maturity)

UBL UK – 4.31% (payable on maturity)

Five-year fixed rate bond

UBL UK – 4.64% (payable on maturity)

SmartSave – 4.78%

UBL UK – 4.64% (payable on maturity)

UBL UK – 4.52% (payable on maturity)

**Islamic bank, pays an expected profit rate. Inflation announcement dates. Top rates exclude deals with restrictive criteria. Notice accounts exclude those over 180 days.

Source: Moneyfactscompare.co.uk

 

ISA market analysis

Top savings deals at £10,000 gross

17-Jan-24

15-Jan-25

17-Dec-25

Today

Easy access ISA

Moneybox – 5.09% (includes bonus)

Moneybox – 5.00%

Vanquis Bank – 4.25%

Plum – 4.28%

Notice ISA

Chorley Building Society – 5.05% (150-day)

Tipton & Coseley – 4.65% (60-day)

Tipton & Coseley BS 4.10% - (60 Day)

Tipton & Coseley BS 4.10% - (60 Day)

One-year fixed rate ISA

Virgin Money – 5.25%

United Trust Bank – 4.54%

Tembo Money – 4.30%

Shawbrook Bank – 4.14% (payable on maturity)

Two-year fixed rate ISA

Close Brothers Savings – 4.75%

Castle Trust Bank – 4.43%

UBL UK – 4.25% (payable on maturity)

UBL UK – 4.13% (payable on maturity)

Three-year fixed rate ISA

UBL UK – 4.61% (payable on maturity)

UBL UK – 4.56% (payable on maturity)

UBL UK – 4.29% (payable on maturity)

UBL UK – 4.16% (payable on maturity)

Four-year fixed rate ISA

UBL UK – 4.54% (payable on maturity)

UBL UK – 4.30% (payable on maturity)

UBL UK – 4.25% (payable on maturity)

UBL UK – 4.15% (payable on maturity)

Five-year fixed rate ISA

UBL UK – 4.64% (payable on maturity)

UBL UK – 4.54% (payable on maturity)

UBL UK – 4.49% (payable on maturity)

UBL UK – 4.49% (payable on maturity)

 Inflation announcement dates. Top rates exclude deals with restrictive criteria. Notice ISAs exclude those over 180 days.

Source: Moneyfactscompare.co.uk

 

*Data note: Please note that these savings product numbers include deals that are available to UK residents (easy access accounts, notice accounts, fixed rate bonds, variable Cash ISAs and fixed Cash ISAs) and exclude regular savers, children’s savers, variable rate fixed term bonds or ISAs, JISAs and LISAs, based on a £10,000 deposit, gross rates. Higher rates may be available for other levels of deposit.

 

Savings market analysis

Top savings deals at £10,000 gross

17-Jan-24

15-Jan-25

17-Dec-25

Today

Easy access account

Ulster Bank – 5.20%

Chase – 4.89%

Sidekick – 4.43% (includes bonus)

Chase – 4.41% (includes bonus)

Notice account

FirstSave – 5.40% (90-Day)

BLME – 4.85% (90-day)

Earl Shilton BS – 4.50% (180-Day)

The Stafford BS – 4.61% (180-Day)

One-year fixed rate bond

SmartSave – 5.31%

Vida Savings – 4.77%

Kent Reliance – 4.51%

Marcus by Goldman Sachs® – 4.55% (payable on maturity)

Two-year fixed rate bond

Union Bank of India (UK) Ltd – 5.15%

Atom Bank – 4.70%

Kent Reliance – 4.42%

LHV Bank – 4.24% (payable on maturity)

Three-year fixed rate bond

Al-Rayan Bank – 4.86%**

SmartSave – 4.62%

UBL UK – 4.39% (payable on maturity)

UBL UK – 4.32% (payable on maturity)

Four-year fixed rate bond

Bank of Ceylon (UK) Ltd (Raisin UK) – 4.55% (payable on maturity)

UBL UK – 4.54% (payable on maturity)

UBL UK – 4.54% (payable on maturity)

UBL UK – 4.31% (payable on maturity)

Five-year fixed rate bond

UBL UK – 4.64% (payable on maturity)

SmartSave – 4.78%

UBL UK – 4.64% (payable on maturity)

UBL UK – 4.52% (payable on maturity)

**Islamic bank, pays an expected profit rate. Inflation announcement dates. Top rates exclude deals with restrictive criteria. Notice accounts exclude those over 180 days.

Source: Moneyfactscompare.co.uk

 

ISA market analysis

Top savings deals at £10,000 gross

17-Jan-24

15-Jan-25

17-Dec-25

Today

Easy access ISA

Moneybox – 5.09% (includes bonus)

Moneybox – 5.00%

Vanquis Bank – 4.25%

Plum – 4.28%

Notice ISA

Chorley Building Society – 5.05% (150-day)

Tipton & Coseley – 4.65% (60-day)

Tipton & Coseley BS 4.10% - (60 Day)

Tipton & Coseley BS 4.10% - (60 Day)

One-year fixed rate ISA

Virgin Money – 5.25%

United Trust Bank – 4.54%

Tembo Money – 4.30%

Shawbrook Bank – 4.14% (payable on maturity)

Two-year fixed rate ISA

Close Brothers Savings – 4.75%

Castle Trust Bank – 4.43%

UBL UK – 4.25% (payable on maturity)

UBL UK – 4.13% (payable on maturity)

Three-year fixed rate ISA

UBL UK – 4.61% (payable on maturity)

UBL UK – 4.56% (payable on maturity)

UBL UK – 4.29% (payable on maturity)

UBL UK – 4.16% (payable on maturity)

Four-year fixed rate ISA

UBL UK – 4.54% (payable on maturity)

UBL UK – 4.30% (payable on maturity)

UBL UK – 4.25% (payable on maturity)

UBL UK – 4.15% (payable on maturity)

Five-year fixed rate ISA

UBL UK – 4.64% (payable on maturity)

UBL UK – 4.54% (payable on maturity)

UBL UK – 4.49% (payable on maturity)

UBL UK – 4.49% (payable on maturity)

 Inflation announcement dates. Top rates exclude deals with restrictive criteria. Notice ISAs exclude those over 180 days.

Source: Moneyfactscompare.co.uk

 

*Data note: Please note that these savings product numbers include deals that are available to UK residents (easy access accounts, notice accounts, fixed rate bonds, variable Cash ISAs and fixed Cash ISAs) and exclude regular savers, children’s savers, variable rate fixed term bonds or ISAs, JISAs and LISAs, based on a £10,000 deposit, gross rates. Higher rates may be available for other levels of deposit.

Notes to editors

You are welcome to use part or all of this press release, so long as we are sufficiently sourced. We would appreciate a link back to Moneyfactscompare.co.uk.

Pioneering financial comparison technology for over 35 years, Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, banking, life, pension and investment products in the UK.

Moneyfactscompare.co.uk is the financial product price comparison site, launched as Moneyfacts.co.uk in 2000 and rebranded to Moneyfactscompare.co.uk in 2023, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfactscompare.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Notes to editors

You are welcome to use part or all of this press release, so long as we are sufficiently sourced. We would appreciate a link back to Moneyfactscompare.co.uk.

Pioneering financial comparison technology for over 35 years, Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, banking, life, pension and investment products in the UK.

Moneyfactscompare.co.uk is the financial product price comparison site, launched as Moneyfacts.co.uk in 2000 and rebranded to Moneyfactscompare.co.uk in 2023, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfactscompare.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

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©2026 Moneyfacts Group plc. All Rights Reserved. Use of this Website constitutes acceptance of the Company’s General Terms of Use & Privacy Policy. Moneyfacts Group plc is registered in England and Wales, company no. 4063110. Registered office: Moneyfacts House, 66-70 Thorpe Road, Norwich, NR1 1BJ. Moneyfacts, MONEY £ ACTS and INTEREST are Registered Trademarks.