It has not been a very happy start to 2021 for savers, as new data shows that average saving rates across all savings charts have fallen month-on-month and have hit new lows.
The research, which is due to be published in the Moneyfacts UK Savings Trends Treasury Report, found that average savings rates in all charts have fallen between 1 December 2020 and 1 January 2021 and now stand at the lowest level since our electronic records began in 2007.
As the table below shows, year-on-year has seen a significant fall in saving rates. Although the average easy access savings account rate is the lowest available across all charts, this rate has seen the smallest fall of all average rates, down by 0.41% year-on-year, from 0.59% on the 1 January 2020 to 0.18% on the 1 January 2021. Saying this, 0.18% sits well below inflation, which means that savers depositing their money into an easy access savings account in the long-term will likely see inflation eroding their hard-earned savings. As well as this, as many parts of the UK are once again in lockdown, those with excess disposable incomes are likely to increase their savings, which could in turn see savings rates fall further. As Rachel Springall, finance expert at Moneyfacts.co.uk, explained: “This latest lockdown could mean a further demise in savings rates on offer as providers may struggle to cope with demand and fill their desired subscription targets much too quickly.”
|Savings market analysis – average rates|
|January 2020||December 2020||January 2021|
|Average easy access rate||0.59%||0.19%||0.18%|
|Average easy access ISA rate||0.85%||0.27%||0.25%|
|Average notice rate||1.03%||0.47%||0.40%|
|Average notice ISA rate||1.12%||0.50%||0.44%|
|Average one-year fixed rate bond||1.20%||0.54%||0.49%|
|Average longer-term fixed rate bond*||1.48%||0.77%||0.70%|
|Average one-year fixed rate ISA||1.15%||0.52%||0.47%|
|Average longer-term fixed rate ISA*||1.37%||0.68%||0.62%|
*Longer-term fixed bonds or ISAs are those with terms over 550 days. Average interest rates based on a £5,000 deposit as at the start of the month. Source: Moneyfacts Treasury Reports
It is not just new savers who will be disappointed with the falling saving rates, but those who have money in a fixed rate account or ISA that is maturing soon may struggle to find a new competitive rate. Here we take a look at what options are available to savers.