nigel woollsey

Nigel Woollsey

Online Writer
Published: 15/07/2019

Moneyfacts UK Savings Trends Treasury Report data, not yet published, reveals that returns on longer-term fixed bonds have fallen to 1.78% in July, the lowest average seen since July 2018 (when it also stood at 1.78%). One-year fixed rate bond returns are also decreasing, as today the average return of 1.41% is the lowest seen since September 2018 (when it stood at 1.40%).

As the anniversary of the August Bank of England base rate rise nears closer, the total number of savings accounts that beat 0.75% stands at 1,358 today – its highest level since November 2017. However, as we have reported before, it took six months (until February) for the number of base rate-beating accounts to recover from the August rise.

An interest rate cut will be detrimental savers, particularly as there are many easy access accounts out there paying less than 0.75%, and our data shows that the average rate stands at 0.62%, just 0.10% more than seen before the August rate rise.

Savings market analysis

 

Aug 2018

Sep 2018

Jun 2019

Jul 2019

Average no notice rate

0.52%

0.58%

0.62%

0.62%

Average one-year fixed rate bond

1.32%

1.40%

1.42%

1.41%

Average longer-term fixed rate bond*

1.82%

1.86%

1.81%

1.78%

*Longer-term fixed bonds are those with terms over 550 days. Source: Moneyfacts Treasury Reports

Rachel Springall, Finance Expert at Moneyfacts, said "Fixed rates are continuing to fall, and the average no notice or easy access return has remained relatively stagnant since last year’s Bank of England base rate rise – so clearly competition is wavering to entice savers to invest.

“In a few weeks it will be the one-year anniversary of the August base rate rise, and presently there are 1,358 products that pay above 0.75%, the highest count since November 2017 (1,374). Still, many of the high street brands’ easy access accounts fail to beat this, so it’s important that savers continue to consider the more unfamiliar brands and switch to a better deal where possible.

“Savers desire to have flexibility with their cash remains firm, as the Bank of England estimated £1.6bn flowed into instant accounts during May, while separate figures from UK Finance revealed deposits into accounts that require a tie in fell by 3.0% year-on-year. Despite this, with economic uncertainties and murmurings of a rate cut before the end 2019 prevalent, savers may sway to these accounts once more if interest rates were to fall, as cuts are usually passed on swiftly to instant access accounts.

“This means that although returns on both one-year and longer-term fixed rate bonds have fallen this month – possibly as providers prepare for an interest rate cut and the subsequent flow of funds into fixed bonds once again – savers may still wish to lock in their cash to secure a competitive return before rates perhaps fall further. It will be interesting to see how providers adjust to these possible influences in the market in the months to come.”

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

close up of coin being saved into piggy bank

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