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Putting cash into savings is better than buying bricks and mortar for the first time since 2012

SAVERS earned more interest than homeowners did on their property last year, according to new analysis.

It’s the first time since 2012 that the amount of interest savers earned outstripped house price growth.

 For the first time since 2012, savings interest rates have outstripped house price growth
For the first time since 2012, savings interest rates have outstripped house price growth

Moneyfacts data shows that the best fixed-rate savings bond on the market in 2018 offered 2.7 per cent.

But Land Registry figures show that house prices in England rose by just 2.6 per cent, bringing the average cost of a property to £247,430.

If you had the top-rate easy access savings account, which paid 1.54 per cent interest, you would also have beaten house price growth in London and the South East, which rose by just 0.7 per cent.

Of course, interest rates are proportional so if your property is worth more than your savings then your cash returns will be more.

Best bank accounts for savers

YOU can now earn tax free interest on any accounts, not just Isas, but the type of one you need will depend on how much you save, what you’re saving for and how often you’ll need to access the cash.

Easy access 

You won’t be penalised for taking your money out but they typically offer lower rates.

  • ICICI Bank UK HiSAVE Bonus Saver, 1.55 per cent – open with £50

One-year fixed 

You will need to be prepared to lock your money away for a year or else forfeit the interest

  • Aldermore one year fixed-rate bond, 2.1 per cent – open with £1,000

Two-year fixed

If you need to take out your money before the two-years is up you will face an early-exit penalty of .

  • Aldermore two-year fixed-rate bond, 2.35 per cent – open with £1,000
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Five-year fixed 

The longer the term, the better the rates but remember you face a penalty of 180 days worth of interest for leaving early.

  • Gatehouse Bank five-year fixed-rate, 2.68 per cent – open with £1,00

Current account 

It’s possible to earn interest on your current account but there are more rules and regulations you’ll need to follow before getting your interest.

  • Nationwide FlexDirect, 5 per cent – earned on balances up to £2,500 for the first year before it drops to 1 per cent


House prices have taken a hammering over the past year as steady growth has been hindered by Brexit uncertainty and a lack of confidence.

At the same time, figures from Lloyds Bank showed that more than a quarter of Brits didn’t bother saving anything in 2018.

It’s no wonder that savers are put off tucking funds away when the base rate is still low, and despite a 0.25 per cent rise in August, only one bank passed on the full rate rise to savers one month later.

House prices in the first month of the year so far have stagnated, something experts predict will continue through the year following Brexit.

Savers can be a littler bit more optimistic though, after Bank of England boss Mark Carney hinted that rates could be set to rise again later this year.

For now though, savers looking to make the most of their funds should think about sticking their extra cash away into a dedicated savings account.

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If you’re looking for an account that won’t penalise you for taking out cash, then you should think about opening an easy access account with ICICI which offers a market leading 1.55 per cent.

Savers who are able to lock their money away for a fixed amount of time can look at Aldermore’s Bank fixed rate accounts which offer up to 2.05 per cent.

First-time buyers who are saving for a house should consider tucking their money away in either a Help To Buy Isa or a Lifetime Isa in order to get free money from the Government towards the cost of purchasing their first property.

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