Average Saving Rates Fall To Historic Low | moneyfacts.co.uk

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Derin Clark

Derin Clark

Online Reporter
Published: 14/12/2020

Savers are facing a disappointing end to 2020 as new data shows that average savings rates have fallen to their lowest levels since records began in 2007.

The data, which is due to be published in the Moneyfacts UK Savings Trends Treasury Report, has found that average rates across the savings sector have fallen month-on-month and are at their lowest levels since 2007.

After a year of falling rates, it will come as no surprise to savers that average saving rates have fallen significantly year-on-year. As the table below shows, the biggest fall in average rates was on long-term fixed rate bonds, which fell by 0.74%, down from 1.51% on 1 December 2019 to just 0.77% on 1 December 2020. The next biggest fall was on one year fixed rate bonds and longer-term fixed rate ISAs, which had both fallen by 0.69%, down from 1.23% to 0.54% and from 1.37% to 0.68% respectively.

 

Average savings rates
  1 December 2019 1 November 2020 1 December 2020
Average easy access rate 0.60% 0.22% 0.19%
Average easy access ISA rate 0.87% 0.31% 0.27%
Average notice rate 1.05% 0.50% 0.47%
Average notice ISA rate 1.14% 0.54% 0.50%
Average one-year fixed rate bond 1.23% 0.61% 0.54%
Average longer-term fixed rate bond* 1.51% 0.87% 0.77%
Average one-year fixed rate ISA 1.17% 0.58% 0.52%
Average longer-term fixed rate ISA* 1.37% 0.76% 0.68%

*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

 

Commenting on the fall in average rates, Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Clearly it has been a tough year for savers, and they will be approaching the end of 2020 with rates falling to record lows. The Coronavirus pandemic and subsequent Bank of England base rate cuts have left an unprecedented impact on the savings market and uncertainty remains.

“Savings providers have had to react to an extremely volatile market this year and this has meant deals have been cut multiple times in a short space of time in some cases or withdrawn from the market entirely. In recent weeks, the easy access market has changed considerably as savers continue to flood this arena thanks to the flexibility the accounts provide, and the recent rate cuts made by National Savings and Investments.”

How savers can get the best rates

Although the average rates are disappointing, savers looking to get a good rate should regularly look at the charts as higher rates are available. For example, the average one year fixed bond rate is just 0.54%, but the best rate in the chart is 0.31% higher, standing at 0.85%. Habib Bank Zurich plc currently pays an expected profit rate of 0.85% gross on its HBZ Sirat eDeposit (Islamic Fixed Term Account) on a 12 month term. Savers happy to lock into a slightly longer term can also get a rate of 0.85% gross on DF Capital’s 18 Month Fixed Rate Deposit (Issue 3), which has an 18 month term. 

Meanwhile the best paying easy access savings rate is currently 0.56% higher than the average rate of 0.19%, with ICICI Bank UK paying 0.75% gross on its SuperSaver Savings Account. Although savers should be aware that this account is only available to those who currently have, or who are happy to open, a HomeVantage Current Account, as well as this the rate is due to be reduced to 0.60% on the 11 January 2021. The next best rate in the easy access savings chart currently comes from Aldermore, which pays 0.60% gross on its Double Access Account Issue 1.

Springall added: “The sight of record low interest rates may cause apathy among savers, but it is vital they continue to compare deals on a frequent basis, especially if they have their cash within an easy access account or are about to come off a fixed-rate deal. There are many challenger banks that continue to take a consistent place within the top rate tables, so it really is worth considering these more unfamiliar brands if savers are hunting down the most attractive rates.”

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