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The savings market has been enjoying something of a revival recently, with both fixed and variable rates edging up, much to the delight of savers. Happily, this isn't the only area of improvement, either, with our latest figures revealing that the number of savings accounts available has hit its highest level in five years.
That's according to the latest Moneyfacts UK Savings Trends Treasury Report, due to be published later this week, which shows that the number of non-ISA savings accounts on the market has risen above 1,400 for the first time since November 2012.
The table below highlights the recent improvement in more detail, with the 1,401 figure marking an increase of 232 over the last year, and 137 in the last six months alone. This means that savers now have more accounts to choose from than they've had in years, with continued competition between providers – most notably challenger banks – paying off for those seeking a home for their hard-earned funds.
|Total number of live products excluding ISAs||1,490||1,169||1,264||1,401|
|Source: Moneyfacts Treasury Report|
"The savings market is showing promising signs of growth as the number of savings products excluding ISAs has increased for the 11th consecutive month to breach the 1,400 mark for the first time in five years," said Charlotte Nelson, finance expert at Moneyfacts.
"The boost in product numbers has been fuelled by challenger banks launching fixed rate bonds into the market. With competition high among these newer banks, many are casting their net wide looking to offer customers any term they could possibly want, ranging from one month all the way up to seven years."
The fixed rate bond market has benefitted the most from this boost in competition, with challenger banks now dominating this sector not just with the number of deals they offer, but also their competitive rates, since this is a key area for them to attract funds for a guaranteed term to use for their lending books.
"These providers are able to easily adjust rates according to their funding requirements, which sees them rise and fall frequently in the Best Buy tables," explained Charlotte.
"Thanks to the extra products, all fixed terms have seen an increase in rate for the second month running, with the average long-term rate increasing from 1.60% last month to 1.62% in October, the highest figure seen in the Moneyfacts UK Savings Trends Treasury Report since June 2016.
"Despite the extra competition in the market, the main banks have remained deafeningly quiet in ignoring the fact that a mini price war is occurring at the top of the market."
Despite main banks still not wanting savers' cash, challengers definitely do, so savers can comfortably benefit from this welcome competition. Challenger banks still come with the same financial protection as their better-known counterparts, too, so there's no reason not to give them a go.
There may be even better news on the horizon as well, with speculation of a base rate rise starting to reach fever pitch. Yet while this is likely to have a swift impact on the mortgage market, there's no telling if this will actually benefit savers to any extent, as "with the link between savings and base rate seemingly severed, it is difficult to predict the effects such a rise would have on savers' pockets," said Charlotte.
It's hoped that any rise to base rate would result in a similar uptick in savings rates, at least in the variable rate sector, which is more dependent on base rate fluctuations. Easy access rates certainly plummeted as soon as base rate was cut, so hopefully providers will feel the pressure to again follow suit when the rate increases.
There's no guarantee, however, particularly in the fixed rate market, so we can only hope it won't take too long for savings rates to follow base rate's lead. Charlotte concludes: "With the industry starting to gear up for a base rate rise, so too must savers, keeping on top of the Best Buys to ensure the best possible return can be had."
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