Signs savings market is stabilising | moneyfacts.co.uk

Moneyfacts.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfacts.co.uk will always be from news@moneyfacts-news.co.uk. Be Scamsmart.


Derin Clark

Derin Clark

Online Reporter
Published: 14/06/2021

There are signs that the savings market is starting to stabilise after a volatile 14 months caused by the pandemic and Bank of England record low base rate cut, but financial experts warn that the savings recovery will likely take a long time.

Research due to be released in the Moneyfacts UK Savings Trends Treasury Report found that for the first time since October 2020, average savings rates have not fallen month-on-month. In fact, the average notice, one year fixed bond and longer term bond rates have actually risen month-on-month, with the average notice account rate rising from 0.36% to 0.40%, the average one year fixed bond rate increasing from 0.44% to 0.48% and the average longer term bond rate rising from 0.66% to 0.72%.

“Challenger banks have made notable improvements to fixed rate bonds and this has resulted in average rates improving on both the one-year and longer-term fixed bond sectors for the second month running,” explained Rachel Springall, finance expert at Moneyfacts.co.uk. “Savers who are reluctant to tie their cash away for too long may still consider a one year bond and over the past month rates have improved slightly, but it is worth keeping in mind that the average of 0.48% is around half of the 0.86% seen a year ago.”

Meanwhile, the average easy access savings rate remained the same month-on-month, standing at 0.16%, as did all ISA rates including easy access ISAs, which remained at 0.22%. Average easy access savings and ISA rates remain unchanged may come as a disappointment to many savers, as Springall said: “One area of the market that is disappointingly still offering record low average rates are easy access accounts and easy access ISAs, and so despite their popularity, savers will find the return on their cash today will be much lower than previous years. In fact, the current average easy access rate of 0.16% is 0.46% less than that of June 2019, but it is 2020 that took its toll on returns due to the Coronavirus pandemic and Bank of England rate cuts. Despite this, savers are still stashing their cash away into sight deposits, perhaps for peace of mind, with £11.6bn in deposits made in April – or £51bn so far this year – according to the Bank of England.”

The start of a savings recovery?

Although easy access savings and ISA rates remaining at record lows will be disappointing to many savers, the fact that the savings charts are starting to stabilise and also see improvements in some sectors, will offer hope to savers that the markets are seeing the first signs of recovery. Saying this, there is a note of caution, as Springall revealed: “The rejuvenation of the savings landscape is going to take time and providers still have the challenge of coping with savers’ cash to contend with and may still withdraw deals or tweak rates if they become saturated with deposits to deter investors. Savers would therefore be wise to keep on top of the changing market by signing up to rate alerts or newsletters and considering the more unfamiliar brands to find some of the best rates available. Switching is still vital and now is as good a time as any for a quick rate comparison now that stability is returning.”

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. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfacts.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

Cookies

Moneyfacts.co.uk will, like most other websites, place cookies onto your device. This includes tracking cookies.

I accept. Read our Cookie Policy