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Five years of historically low BoE rate

Five years of historically low BoE rate

Category: Savings

Updated: 03/03/2014
First Published: 03/03/2014

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Thursday is expected to mark the fifth year of the historically low BoE base rate of 0.5%. Moneyfacts has analysed the best paying accounts from March 2009 against today's equivalents.

Moneyfacts research shows the top paying no notice account five years ago was paying 3.35% compared to the top paying equivalent account today, which pays just 1.50%. The loss in return is almost £19 a year, before the taxman has his cut and excluding the ravages of inflation.

The notice account shows a similar story, only today the top paying notice account demands double the notice period to earn £17 less a year.

The best no notice ISA returns £12.78 less today and the best paying one-year fixed rate bond has dropped by 2% from 3.90% in 2009 to just 1.90% today, costing savers £20.53 a year.

Sylvia Waycot, Editor at , said: "Rates have plummeted since March 2009 to such an extent that these days you need to lock your money away for seven years to get a similar rate to what was previously being paid in a simple no notice account.

"Five years ago, notice and no notice accounts were the most popular accounts of the day, paying rates so close to those of a five-year bond that it seemed pointless to lock your money away.

"The historic low BoE base rate, combined with Funding for Lending, means savers have seen returns virtually disappear."

"Worse still, the interest paid on savings accounts is now out of kilter with BoE base rate to the extent that even if base rate rises, it might not lead to saving rates rising in tandem as they previously did.

"The only time savers will get better rates is when banks need savers' money. The problem is we can't bank on when that might be."

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