Savers are set to benefit from a price war triggered by last month's Bank of England base rate rise, market analysts said this week.
Moneysupermarket.com, the online price comparison service, said several savings account providers had raised their rates by significantly more than the 0.25 percentage point Bank of England increase.
Stuart Glendinning, the company's managing director, said: "We have seen a new level of competition in the market not seen in the UK for years and now five providers are offering easy-access saver accounts with rates from 5.6 per cent a year upwards."
The price war is currently being led by HSBC, which last week raised the rate it pays on its Online Saver account by 0.75 percentage points to 5.75 per cent a year. The AA and Birmingham Midshires have also raised rates on their best accounts, in both cases to 5.60 per cent.
The three savings providers join ICICI Bank and Icesave in offering rates of 5.60 per cent a year. Both banks, which launched into the UK market with competitive deals last year, have also raised their rates since the base rate increase, to 5.65 and 5.7 per cent respectively.
Rachel Thrussell, head of savings at Moneyfacts, personal finance data provider, said there was increasing evidence that savings providers are targeting customers of ING Direct. The Dutch bank launched into the UK in 2003 with a rate of 4.5 per cent - 0.8 percentage points above the base rate at the time - and quickly built up a very large share of the savings market.
However, ING has been criticised for failing to pass on two base rate rises to its customers - its rate is now 4.75 per cent, 0.50 points below the base rate.
Thrussell said: "The banking heavyweights are perhaps anticipating an exodus of customers from ING and offering what appear to be tempting deals for those seeking a new home for their nest egg."Reuse content