Average saving rates across all charts except notice ISAs have increased month-on-month, with challenger banks boosting competition within the savings market.
Figures due to be released in the Moneyfacts UK Savings Trends Treasury Report show that that the average rate on easy access savings accounts has increased by 0.01% month-on-month, up from 0.16% in June to 0.17% in July. Meanwhile, the average rate on one year fixed rate bonds has risen by 0.04% and the average rate on longer-term bonds has risen by 0.05%, up from 0.48% to 0.52% and 0.72% to 0.77% respectively.
Although some high street banks and building societies are offering highly competitive rates, for example Leeds Building Society offering a market-leading easy access savings account rate of 0.50% on its Limited Issue Online Access Account (Issue 20), savers will likely have to look to challenger bank for the top savings rates.
“The rise of challenger banks in recent years has breathed life into the savings market and there are now more savings providers than ever before on our records,” explained Rachel Springall, finance expert at Moneyfacts.co.uk. “The injection of much-desired competition has been noticed even more recently, as challenger banks make their presence known in the top rate tables. In the past few weeks alone, there have been several rate increases to fixed bonds, many by challenger banks. However, the shelf life on a fixed rate bond fell to 53 days, showing signs that a good deal may not last too long as brands continue to react to market movements.”
Eligible deposits with UK institutions are protected by the Financial Services Compensation Scheme (FSCS) up to a maximum level of protection of £85,000 per person per institution. All new savings or bank accounts provided to UK customers are now covered by the FSCS.
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Average ISA rates have also risen month-on-month, with the exception of notice ISAs where the average rate has fallen to a record low of 0.31% in July. Those looking for an easy access ISA will be pleased to see that the average rate has risen month-on-month for the first time since October 2020 and now stands at 0.23%, up from 0.22% in June. Meanwhile, the average rate on one year fixed rate ISAs has increased to 0.39%, up from 0.35% in June, and the average longer-term ISA rate has increased to 0.66%, increasing from 0.58%.
Overall, the month-on-month rise in saving and ISA rates is good news for savers, although many will be disappointed that rates have not increased significantly. As well as this, no savings account or ISA can match or beat the current rate of inflation and with some experts predicting that inflation may rise further, unless there are significant rate rises within the savings charts savers are still likely to face a challenging few months ahead. “Savers would be wise to keep a close eye on the top rate tables and act quickly to take advantage,” added Springall. “Savings providers will need to be ready to react to demand, keep a firm grasp on market trends and service their customers as best they can during these challenging times.”
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