Putting cash into savings is better than buying bricks and mortar for the first time since 2012
The best fixed-rate savings account on the market in 2018 offered 2.7 per cent interest while house prices grew just 2.6 per cent
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.
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 180 days worth of interest.
- Aldermore two-year fixed-rate bond, 2.35 per cent - open with £1,000
Five-year fixed
The longer the term, the better the rates but you will not be able to withdraw your funds unless in "exceptional circumstances".
- Gatehouse Bank five-year fixed-rate, 2.68 per cent - open with £1,000
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.
Becky O'Connor from Royal London said: "Savings rates have been offputtingly low over recent years, as a result of the rock bottom Bank of England base rate.
"However they have risen slightly as the base rate has increased.
"Coupled with a decline in the rate of house price growth, this trend has resulted in the most competitive savings accounts now paying more interest annually than property owners typically earned in the last 12 months.
"While it is still difficult to beat inflation with most savings rates on offer, if you live in London or the South East, it is now easy enough to beat the current rate of house price inflation with a savings account."
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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