In his latest market update Derek Sprawling, Paragon Bank's Savings Director, looks ahead to 2023 and how savers should take advantage of current interest rates. 

When the Bank of England’s Monetary Policy Committee met in December there was only one likely outcome – another rise in the base rate.

The decision marks the end of a historic year. After over a decade of little change, with the base rate never rising above 0.75%, we will have gone through a year of dramatic rate rises.

With the rate topping 3% for the first time since late 2008 it would be understandable for savers to conclude that the rate is set to continue upwards for some time yet - but nothing lasts forever.

While the base rate is likely to peak before summer 2023, that does not mean that savers are currently unable to access financial products that will provide them with strong returns on their deposits. In fact, the opposite is true.

By looking beyond the high street providers to specialist banks, such as Paragon, savers are today able to secure rates of over 3.5% on a range of fixed-term savings products. With these rates already available savers should question if waiting is the best option for their hard-earned cash and instead ask themselves whether it would be best to start seeing a return sooner rather than later.

Unfortunately, the data on savings deposits shows that far too few savers are seeing the returns they deserve.

Whilst I can see a start of increased proactivity from savers, Paragon analysis of September's CACI data found that 82% of all non-ISA instant access savings accounts were receiving less than 0.5% interest. This equates to over £482 billion of deposits receiving a return far lower than they could be by simply switching to a specialist bank.

Not only could these deposits be generating a greater for return for savers but by switching where they are held could also help boost the economy.

Specialist banks play a key role by providing financing to businesses throughout the UK, enabling them to hire more staff, invest in new equipment, and expand the range of services available to customers – and the role we play is going to be essential in the year ahead.

On a daily basis I am able to see the fantastic businesses Paragon is proud to support, enabled by savers choosing one of our savings products. Receiving a strong return on your savings and knowing that you are helping the wider economy at the same time are two excellent reasons why savers should start looking at specialists as part of their 2023 financial planning.

Savers looking at 2023 should also consider the benefits of ISAs. With the new tax year starting in April, now is time for investigate whether they are right for their circumstances – and those who have not yet used all their tax-free allowance may wish to consider doing so in advance of any looming deadline.

They should remember that can spread their savings across a variety of ISA products up to the £20,000 limit. This can provide them the opportunity to prepare for 2023 and beyond with a flexible variety of options to suit their needs.

With government forecasts predicting a challenging year ahead for the economy, it may be some time yet before we see sustained periods of economic growth and stability. But by researching the products available and choosing the right time to secure the best products for their circumstances, savers can take good advantage of what is on offer and use the remaining weeks of 2022 to put themselves on a surer footing.