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Base rate beating deals plunge, despite competition

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Rachel Springall, Press Officer
Rachel Springall, Press Officer / Finance Expert T: 01603 476210 E: Email Rachel
18/07/2022

Base rate beating deals plunge, despite competition

Base rate beating deals plunge, despite competition

Moneyfacts UK Savings Trends Treasury Report data shows little more than half of the savings market (51%) can beat base rate, despite an uplift to savings rates month-on-month.

 

Moneyfacts UK Savings Trends Treasury Report data shows little more than half of the savings market (51%) can beat base rate, despite an uplift to savings rates month-on-month.

 

  • The number of savings accounts that can beat the Bank of England base rate of 1.25% (887 deals) has fallen month-on-month and represents 51% of the savings market. Since the start of December 2021, when 79% of the market (1,303 deals) could outpace 0.10%, there has been a fall of 416 accounts paying above base rate. The proportion of the market that can pay above base rate is at its lowest level since April 2022 when it was also 51% (851 deals).
  • The average easy access rate rose to 0.59% and stands at its highest point in more than two years (0.59% in January 2020). The average notice rate rose to 1.08%, now the highest rate in almost three years (1.08% in November 2019).
  • The easy access ISA rate rose month-on-month to 0.65% and stands at its highest point since April 2020 (0.79%). The average notice ISA rate rose to 0.93% and is at its highest since April 2020 (1.05%).
  • The average one-year fixed bond rose to 1.75% and stands at its highest level since March 2013 (1.80%). The average longer-term fixed bond rate rose to 2.21%, breaching 2% for the first time since February 2016 (2.03%) and is at its highest point since May 2013 (2.21%).
  • The average one-year fixed ISA now stands at 1.35%, its highest point since March 2019 (1.37%). The average longer-term fixed ISA rate rose to 1.90% and is at its highest point since December 2015 (1.95%).
  • Product choice overall has grown by 234 deals year-on-year, to 1,734 savings deals (including ISAs), the highest count in choice since March 2020, and is far beyond the record low count of 1,340 in April 2021.
  • The number of savings accounts that can beat the Bank of England base rate of 1.25% (887 deals) has fallen month-on-month and represents 51% of the savings market. Since the start of December 2021, when 79% of the market (1,303 deals) could outpace 0.10%, there has been a fall of 416 accounts paying above base rate. The proportion of the market that can pay above base rate is at its lowest level since April 2022 when it was also 51% (851 deals).
  • The average easy access rate rose to 0.59% and stands at its highest point in more than two years (0.59% in January 2020). The average notice rate rose to 1.08%, now the highest rate in almost three years (1.08% in November 2019).
  • The easy access ISA rate rose month-on-month to 0.65% and stands at its highest point since April 2020 (0.79%). The average notice ISA rate rose to 0.93% and is at its highest since April 2020 (1.05%).
  • The average one-year fixed bond rose to 1.75% and stands at its highest level since March 2013 (1.80%). The average longer-term fixed bond rate rose to 2.21%, breaching 2% for the first time since February 2016 (2.03%) and is at its highest point since May 2013 (2.21%).
  • The average one-year fixed ISA now stands at 1.35%, its highest point since March 2019 (1.37%). The average longer-term fixed ISA rate rose to 1.90% and is at its highest point since December 2015 (1.95%).
  • Product choice overall has grown by 234 deals year-on-year, to 1,734 savings deals (including ISAs), the highest count in choice since March 2020, and is far beyond the record low count of 1,340 in April 2021.

 

Savings market analysis – average rates

 

Jul-20

Jul-21

Jun-22

Jul-22

Average easy access rate

0.24%

0.17%

0.46%

0.59%

Average easy access ISA rate

0.37%

0.23%

0.52%

0.65%

Average notice rate

0.54%

0.42%

0.94%

1.08%

Average notice ISA rate

0.60%

0.31%

0.77%

0.93%

Average one-year fixed rate bond

0.70%

0.52%

1.53%

1.75%

Average longer-term fixed rate bond*

0.92%

0.77%

1.97%

2.21%

Average one-year fixed rate ISA

0.61%

0.39%

1.21%

1.35%

Average longer-term fixed rate ISA*

0.80%

0.66%

1.67%

1.90%

*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

 

Savings market analysis – product count

 

Jul-20

Jul-21

Jun-22

Jul-22

Number of live savings account options (excluding ISAs)

1,081

1,148

1,297

1,312

Number of live ISA options

317

352

414

422

Source: Moneyfacts Treasury Reports

 

Savings market analysis – average rates

 

Jul-20

Jul-21

Jun-22

Jul-22

Average easy access rate

0.24%

0.17%

0.46%

0.59%

Average easy access ISA rate

0.37%

0.23%

0.52%

0.65%

Average notice rate

0.54%

0.42%

0.94%

1.08%

Average notice ISA rate

0.60%

0.31%

0.77%

0.93%

Average one-year fixed rate bond

0.70%

0.52%

1.53%

1.75%

Average longer-term fixed rate bond*

0.92%

0.77%

1.97%

2.21%

Average one-year fixed rate ISA

0.61%

0.39%

1.21%

1.35%

Average longer-term fixed rate ISA*

0.80%

0.66%

1.67%

1.90%

*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

 

Savings market analysis – product count

 

Jul-20

Jul-21

Jun-22

Jul-22

Number of live savings account options (excluding ISAs)

1,081

1,148

1,297

1,312

Number of live ISA options

317

352

414

422

Source: Moneyfacts Treasury Reports

Rachel Springall, Finance Expert at Moneyfacts, said:

“Interest rates have risen across the savings spectrum for a fifth consecutive month, promising signs for savers who either want some flexibility or a guaranteed return on their cash. It has been over six months since the first of five base rate rises were announced, and while rate competition among many savings providers has been prevalent, just 51% of the savings market pays above 1.25%, the current Bank of England base rate. The market clearly has more room for growth but, as we have seen in the past, a base rate rise does not always get passed on to consumers. However, it should encourage savers to compare deals and switch.

“Savers looking to maximise their interest earned but wanting to avoid locking their cash away over the longer-term, could choose a one-year fixed bond, an area of the savings market which has improved enormously. Since the start of 2022, the average one-year fixed bond rate has more than doubled, up from 0.80% to 1.75%, largely fuelled by competition among challenger banks. Such rigorous rate changes last month resulted in a drop to the average shelf life of a fixed bond to 33 days, down from 44 a month ago. Savers coming off a one-year bond wanting to fix for an equivalent bond could earn 1.23% more on average today (1.75%) than what was available 12 months ago (0.52%).

“The substantial uplift to both one-year and longer-term fixed rates may well be enticing savers to fix, as according to the Bank of England, there was an inflow of £1.65 billion into interest-bearing time deposits, the highest monthly inflow figure since October 2020 (£2.17 billion). Over the past two years, outflows have been a more common sight, and it has been interest-bearing sight deposits, such as easy access accounts, seeing much larger volumes of deposits. Indeed, between January and May 2022, there has been an inflow of £20 billion into interest-bearing sight deposits, compared to £2.5 billion for interest-bearing time deposits. However, consumers have clearly changed their attitudes to putting money aside this year with changing circumstances, as during the same period in 2021, there was an inflow of £56.3 billion in interest-bearing sight deposits.

“Cash ISA rates are encouragingly on the rise, both across easy access, notice accounts and fixed, but savers will often find that they can get a higher rate outside of an ISA wrapper. Due to the rising cost of living, savers might decide to dip into an ISA pot that permits access, but the shifting appeal of a Cash ISA has already been noted in Bank of England data, where between January and May 2022, there was an outflow of £4.5 billion, much higher than the equivalent period in 2021 where there was a net outflow of almost £1.6 billion. Cash ISAs are still worth considering for their longer-term tax-free benefits, and these can be a haven for those who feel the stock market is too risky.

“Savers unsure of which type of account to choose in the coming weeks may want to consider a notice account as a compromise between easy access and fixed bonds, particularly as notice accounts now pay the highest average return recorded in almost three years. Consumers and providers alike would be wise to compare deals in the top rate tables frequently. As interest rate rises continue to shuffle product positions, deals are not guaranteed to sit on the shelf for long.”

Rachel Springall, Finance Expert at Moneyfacts, said:

“Interest rates have risen across the savings spectrum for a fifth consecutive month, promising signs for savers who either want some flexibility or a guaranteed return on their cash. It has been over six months since the first of five base rate rises were announced, and while rate competition among many savings providers has been prevalent, just 51% of the savings market pays above 1.25%, the current Bank of England base rate. The market clearly has more room for growth but, as we have seen in the past, a base rate rise does not always get passed on to consumers. However, it should encourage savers to compare deals and switch.

“Savers looking to maximise their interest earned but wanting to avoid locking their cash away over the longer-term, could choose a one-year fixed bond, an area of the savings market which has improved enormously. Since the start of 2022, the average one-year fixed bond rate has more than doubled, up from 0.80% to 1.75%, largely fuelled by competition among challenger banks. Such rigorous rate changes last month resulted in a drop to the average shelf life of a fixed bond to 33 days, down from 44 a month ago. Savers coming off a one-year bond wanting to fix for an equivalent bond could earn 1.23% more on average today (1.75%) than what was available 12 months ago (0.52%).

“The substantial uplift to both one-year and longer-term fixed rates may well be enticing savers to fix, as according to the Bank of England, there was an inflow of £1.65 billion into interest-bearing time deposits, the highest monthly inflow figure since October 2020 (£2.17 billion). Over the past two years, outflows have been a more common sight, and it has been interest-bearing sight deposits, such as easy access accounts, seeing much larger volumes of deposits. Indeed, between January and May 2022, there has been an inflow of £20 billion into interest-bearing sight deposits, compared to £2.5 billion for interest-bearing time deposits. However, consumers have clearly changed their attitudes to putting money aside this year with changing circumstances, as during the same period in 2021, there was an inflow of £56.3 billion in interest-bearing sight deposits.

“Cash ISA rates are encouragingly on the rise, both across easy access, notice accounts and fixed, but savers will often find that they can get a higher rate outside of an ISA wrapper. Due to the rising cost of living, savers might decide to dip into an ISA pot that permits access, but the shifting appeal of a Cash ISA has already been noted in Bank of England data, where between January and May 2022, there was an outflow of £4.5 billion, much higher than the equivalent period in 2021 where there was a net outflow of almost £1.6 billion. Cash ISAs are still worth considering for their longer-term tax-free benefits, and these can be a haven for those who feel the stock market is too risky.

“Savers unsure of which type of account to choose in the coming weeks may want to consider a notice account as a compromise between easy access and fixed bonds, particularly as notice accounts now pay the highest average return recorded in almost three years. Consumers and providers alike would be wise to compare deals in the top rate tables frequently. As interest rate rises continue to shuffle product positions, deals are not guaranteed to sit on the shelf for long.”

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Contact Us If you're looking for extra comment, a chart or more information, then please give us a call. We are always more than happy to help.
Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert