Average Saving Rates Lowest Levels On Record | moneyfacts.co.uk

Derin Clark

Derin Clark

Online Reporter
Published: 17/08/2020

Average saving rates have fallen to their lowest levels on record, despite the market benefiting from some providers increasing rates or launching top-paying deals over the last few weeks.

Data to be published in this month’s Moneyfacts UK Savings Trends Treasury Report reveals that since March, average rates across all types of savings products have fallen. There is further disappointment for savers looking for the flexibility of an easy access account or an easy access ISA, as both these products have seen rates more than halve since March.

 

Savings market analysis – average rates
  March 2020 July 2020 August 2020
Average easy access rate 0.56% 0.24% 0.22%
Average easy access ISA rate 0.83% 0.37% 0.32%
Average notice rate 1.00% 0.54% 0.48%
Average notice ISA rate 1.13% 0.60% 0.52%
Average one-year fixed rate bond 1.15% 0.70% 0.63%
Average longer-term fixed rate bond* 1.37% 0.92% 0.84%
Average one-year fixed rate ISA 1.14% 0.61% 0.56%
Average longer-term fixed rate ISA* 1.29% 0.80% 0.75%

*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

 

“As the UK enters a recession for the first time in 11 years, consumers may be looking to put aside some cash for an emergency fund in response,” explained Rachel Springall, finance expert at Moneyfacts.co.uk. “Since the UK lockdown, savings rates have plummeted to record lows across the board, so prospective savers may be disheartened with the current rates on offer.

“The impact of the Coronavirus pandemic and subsequent base rate cuts has caused a rate-cutting trend among savings providers and while this is expected to slow down, there are few signs of the market making a U-turn any time soon. Choice is also limited, and despite a small rise to the number of savings account options including ISAs month-on-month, there are 366 fewer options than there were at the start of March 2020.”

Signs of hope for savers

Although the savings market paints a gloomy picture for savers at the moment, there is some hope that more market-leading rates will be introduced – although these rates may not be around for very long.

Last week we reported that Coventry Building Society launched chart-topping four and five year fixed rate ISAs. Meanwhile, earlier in the week we reported that since the start of July, QIB (UK), Charter Savings Bank and United Trust Bank had all increased their one year fixed bond rates multiple times.

Indeed, data due to be published in the Treasury report also found that that the number of savings products available to consumers had increased for the first time since November 2019. Saying this, as the below chart shows, the number of products available remains significantly less than were available just five months ago in March.

 

Savings market analysis – product count
Product numbers and rates March 2020 July 2020 August 2020
Number of live savings account options (excluding ISAs) 1,351 1,081 1,083
Number of live ISA options 417 317 319

Source: Moneyfacts Treasury Reports

 

As overall savings rates remain subdued, savers are likely to have to work harder to get the best rates available – keeping up to date with the charts, snapping up deals as they are launched and perhaps looking to less familiar challenger banks. As Springall explained: “Challenger banks may still attempt to entice new savers over the short-term to fund their future lending – proven in recent weeks by one year fixed bond competition in the top rate tables – but it is unknown whether this will continue over the coming months. The average one year fixed bond rate has fallen by more than a third since the start of March, so even if a few deals improve, there will need to be a market-wide movement to return to the rates seen pre-lockdown.”

She added: “As more cash could flood the savings market, providers will need to act quickly to cope with demand and they could pull offers entirely if subscription levels fill too quickly, but this could well lead to a domino effect of other providers following suit. Savers who may wish to put away any disposable income amassed during lockdown will need to act quickly or be left disappointed.”

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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