Rachel Springall, Finance Expert at Moneyfacts, said:
“The savings market is experiencing a positive uplift to rates and there now appears to be signs of a possible ISA season this year. However, many savers will find they are unable to beat the Bank of England base rate as there remains to be many deals incapable of outpacing 0.50%. Despite encouraging signs of rates rising, there is clearly much more room for improvement for cash savers, but it could take a few months yet before consumers will see a base rate rise passed onto them, but there is no guarantee this will even come to light.
“One of the most popular savings vehicles is undergoing a spate of competition, as easy access accounts are now, on average, paying the highest rate seen since June 2020. However, back in March 2020, the average easy access account returned 0.56%, which is more than double the current return of 0.25%. Before the UK lockdown, base rate stood at 0.75%, and with base rate expected to climb beyond the present rate of 0.50%, savers will no doubt be curious as to whether we could see interest rates return to pre-pandemic levels, but this does seem farfetched.
“Those savers who are looking to take advantage of a guaranteed cash return over the next year or more will be pleased to see fixed rates rising, with the average one-year bond rate standing at 0.89%, its highest level since May 2020, which may well hit 1% in the months to come should competition continue in the sector, considering the average rate was 0.67% just six months ago. Whether savers are content to lock their cash away for the longer-term is debatable due to the current economic environment, but the average longer-term fixed rate has reached a pre-pandemic high (March 2020). Savers comparing fixed bonds to ISAs are wise, as while we are seeing rates rise across the ISA market, consumers could find more lucrative rates on deals outside of an ISA wrapper and still can earn their interest tax-free if they stay within their Personal Savings Allowance.
“Savers are still putting their cash away in easy to access accounts, as during the month of January, inflows to sight deposits grew, but inflows to time deposits fell, according to the Bank of England. Cash ISA outflows continued in January, but seasonably, over the past two years at least, deposits to Cash ISAs can rise, so we may see the consecutive outflows from Cash ISAs cease now that the ISA market is moving in the right direction. Those savers seeking the best rates must keep a close eye on the top rate tables as competition is rife.”
Rachel Springall, Finance Expert at Moneyfacts, said:
“The savings market is experiencing a positive uplift to rates and there now appears to be signs of a possible ISA season this year. However, many savers will find they are unable to beat the Bank of England base rate as there remains to be many deals incapable of outpacing 0.50%. Despite encouraging signs of rates rising, there is clearly much more room for improvement for cash savers, but it could take a few months yet before consumers will see a base rate rise passed onto them, but there is no guarantee this will even come to light.
“One of the most popular savings vehicles is undergoing a spate of competition, as easy access accounts are now, on average, paying the highest rate seen since June 2020. However, back in March 2020, the average easy access account returned 0.56%, which is more than double the current return of 0.25%. Before the UK lockdown, base rate stood at 0.75%, and with base rate expected to climb beyond the present rate of 0.50%, savers will no doubt be curious as to whether we could see interest rates return to pre-pandemic levels, but this does seem farfetched.
“Those savers who are looking to take advantage of a guaranteed cash return over the next year or more will be pleased to see fixed rates rising, with the average one-year bond rate standing at 0.89%, its highest level since May 2020, which may well hit 1% in the months to come should competition continue in the sector, considering the average rate was 0.67% just six months ago. Whether savers are content to lock their cash away for the longer-term is debatable due to the current economic environment, but the average longer-term fixed rate has reached a pre-pandemic high (March 2020). Savers comparing fixed bonds to ISAs are wise, as while we are seeing rates rise across the ISA market, consumers could find more lucrative rates on deals outside of an ISA wrapper and still can earn their interest tax-free if they stay within their Personal Savings Allowance.
“Savers are still putting their cash away in easy to access accounts, as during the month of January, inflows to sight deposits grew, but inflows to time deposits fell, according to the Bank of England. Cash ISA outflows continued in January, but seasonably, over the past two years at least, deposits to Cash ISAs can rise, so we may see the consecutive outflows from Cash ISAs cease now that the ISA market is moving in the right direction. Those savers seeking the best rates must keep a close eye on the top rate tables as competition is rife.”
