Our Savings 2025 Report looked at what could happen when the Bank of England starts to raise rates and what this could mean for savers by 2025.

What goes down, must come up…

There’s a lot of talk about how much longer the Bank of England can hold off raising the base rate so our research took a longer-term view, forecasting trends in savings over the next ten years.

The average savings interest rate is forecast to increase by 1% by 2025, up to an average rate of 2.3%. Stand this next to the forecast Bank of England base rate rise of 2% by 2025 (which will start creeping up from 2017) and it’s clear that savings rates aren’t going to increase in line with base rate, challenging the long-held mindset of UK savers. This starts to impact people in different ways.

So, the good news is that savings interest rates and household savings look to steadily increase over the next ten years. This is especially true when you consider family savings pots are expected to grow by a projected £11,700 and could earn an extra £1,300 a year in annual interest by 2025.

The bad news? Those with loans or mortgages will see a few tough years as their disposable income falls as a result of stunted income growth. We found that it will take 10 years of income growth for monthly savings to reach in real terms what they were in 2015.

We believe Mark Carney’s recent advice - people should start preparing for a potential base rate rise now and try and save as much as they can – is sensible and the best step consumers can take.

One thing that was clear from the Savings 2025 report is that a lot of consumers want more from their savings rates than is forecast to happen. Savings rates are very unlikely to hit the rates that people said they’d want to see (4% - 7%) in the next ten years. Yet this shouldn’t put people off. There are accounts out there, like our easy access Freedom Savings Account and Fixed Term accounts that pay far above the average rate - these will certainly provide hope to savers who want to minimise any impact of a base rate rise by letting them take advantage of leading rates today.