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Six months on from the Bank of England's base rate rise the savings market has finally recovered and now 72% of savings accounts offer rates that are over 0.75%.
Data from Moneyfacts UK Savings Trends Treasury Report shows that when base rate rose from 0.50% to 0.75% last summer, the number of savings accounts that beat it fell from 74% to 66%. Now, the number of accounts offering a return above base rate is 72%. This is good news for savers as they are finally seeing the benefits of the Bank of England's August base rate rise.
As the rate offered to savers has risen over this period, so has the number of products. The total number of products fell from 1328 before the rise on 1 August, to 1188 the next day – however, this month the total number of products actually stands one higher than before the news (1329).
"Despite more choice for savers, the number of products that do not beat 0.75% today still account for more than a quarter of the savings market, which highlights the necessity to revisit any variable rate accounts that may have been overlooked since the rate rise, as consumers could be earning less than they think," said Rachel Springall, finance expert at Moneyfacts. "As an example, in the six months following the increase, Barclays Bank passed just 0.05% of the 0.25% rise onto its Everyday Saver, up from 0.20%, to now pay 0.25% today (based on a £10,000 deposit).
"Indeed, the biggest high street bank brands (Barclays Bank, Halifax, HSBC, Lloyds Bank, NatWest/RBS, Santander, TSB) still pay less than bank base rate on their easy access accounts. It is estimated that easy access accounts overall hold over £350bn in funds, despite underwhelming competition in this market, according to a study by the Financial Conduct Authority."
Not only do many high street brands still pay less than base rate on their easy access accounts, but Rachel suggests that challenger banks are competing across the savings market, and now could be the time to switch:
"As it stands, providers who are offering the top rates in the market, such as challenger banks, will need to continue to build up trust with savers who may well be apathetic to switch. The cost of convenience – leaving deposits languishing in poor-paying accounts – should not be ignored, especially as rates can be as low as 0.10%.
"Consumers must therefore not rely on Bank of England rate rises to improve the market instantaneously, as it may take a while for providers to pass any rise on – a trend we also saw after the rate rise in 2017. Simply put, savers are likely to secure a better return if they switch, and the challenger brands should use this fact as an opportunity to entice new customers."
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