Savers hoping for a positive end to 2019 will be disappointed to see that savings rates continue to be cut, resulting in the number base rate-beating products at their lowest level since March 2018.
Data in Moneyfacts UK Savings Trends Treasury Report found that the number of products that beat the Bank of England’s base rate of 0.75% fell by 80 between November and December 2019. This was the biggest drop in base-rate beating products month-on-month since December 2017, when a rise in base rate saw 150 products no longer offering base rate-beating deals.
In addition to this, the data also shows that there are currently just 1,254 saving deals that beat base rate, the lowest number of base rate-beating deals since March 2018 when 1,251 products paid more than the then Bank of England base rate of 0.50%.
Impact of the Bank of England base rate increases and present savings market
| UK savings accounts* |
01-Nov-17 |
01-Dec-17 |
01-Aug-18 |
01-Sep-18 |
01-Nov-19 |
01-Dec-19 |
| Number of products that beat base rate |
1374 |
1224 |
1328 |
1263 |
1334 |
1254 |
| Number of products overall |
1772 |
1751 |
1803 |
1843 |
1906 |
1826 |
|
% of deals that beat base rate
|
78% |
70% |
74% |
69% |
70% |
69% |
| % of deals that do not beat base rate |
22% |
30% |
26% |
31% |
30% |
31% |
| Bank of England base rate |
0.25% |
0.50% |
0.50% |
0.75% |
0.75% |
0.75% |
*Savings account numbers include all interest-paying options for variable and fixed rates and includes ISAs.
Rachel Springall, finance expert at Moneyfacts, said: “It has clearly been an unforgiving year for the savings market, which has felt an onslaught of cuts – and seen deals pulled from the market entirely – as providers reined in competition. Startling changes have been made in both the fixed rate market and variable market, which has seen lucrative offers worsen as a result.
“This will be disappointing news to savers who are looking for a competitive return on their hard-earned cash, but at the same time, this creates a difficult environment for providers who may find themselves inundated with applications if they sit high up in the top rate tables. The challenger banks appear to have adjusted their market exposure to possibly combat this, as it is no longer sustainable to sit head and shoulders above their competition.
“At the same time, the market is in the shadows of economic uncertainties and this may have been a catalyst for the Islamic banks to slash their expected profit rates over 2019. It’s not just guaranteed fixed returns either, as even easy access savings accounts are feeling the pressure – including prominent brands like Virgin Money cutting rates – an area where they typically compete more fiercely.
“As it stands, savers will need to keep a very close eye on these changes in the market, as a lack of vigilance could mean that they are earning a less attractive deal than they realise. Savings accounts can be pulled without much notice, so if they are thinking of taking advantage then speed is crucial.”
