Real estate market frenzy raises cash savings rates

However, real estate experts said the market would lose momentum when the stamp duty holidays end later in the summer.

Banks will no longer need higher savings reserves if the number of mortgage applications goes down, Coles said.

The lenders offering the best rates are usually smaller banks rather than brands, so there will be a limit on the amount of money they can lend. Deals can also be short-lived if they attract a lot of money in a short period of time.

Savers have seen their returns drop to near zero over the past 12 months, earning pennies for depositing their hard-earned money. Interest earned on savings accounts fell to all-time lows this spring as Britain saved more than ever during the pandemic. The average easy-access rate fell to 0.16% in May of this year, from 0.40% in May 2020.

There were 142 fewer offers available to savers in May compared to a year ago. Rachel Springall of Moneyfacts, an analyst, said average rates may have risen slightly, but savers have a “long wait” before making a substantial recovery.

The Bank of England cut the discount rate to 0.1 pc in March 2020 with the aim of supporting the UK economy during the pandemic. Ms Coles said the central bank was unlikely to hike the base rate until inflation was consistently at or above the 2pc target.