Rachel Springall, Finance Expert at Moneyfacts, said:

“Savers will no doubt be concerned over falling interest rates due to the 0.25% cut to the Bank of England base rate, but our savings trends that were observed prior to the cut revealed an interesting split in how providers were re-adjusting their market positions with rate tweaks prior to the announcement. Over the past few months, fixed rate bonds and Cash ISAs have been on the downward trend, largely due to the markets expecting future interest rates to come down. Despite the rate cuts since the start of 2024, the availability of products has been on the rise, and as we noted last month, product count is at its highest level in over 12 years.

“One area of the savings market to show resilience between the start of July and the start of August was Cash ISAs, with both the average one- and longer-term fixed rates refusing to move in the same direction as their fixed rate bond counterparts. A similar story can be seen from both the average easy access and notice Cash ISA rates, where these both rose month-on-month. The average easy access Cash ISA rate rose to its highest point since the start of April, just a few days before the start of the 2024/2025 tax year. The average notice Cash ISA rate also rose, this time to its highest point so far this year. Cash ISAs are ideal for savers concerned about breaching their Personal Savings Allowance (PSA). As an example, a higher rate taxpayer would breach their £500 interest earned allowance if they had £20,000 invested for a year that earned them more than 2.5%.

“It will be interesting to see how both the average rates and overall product availability will be impacted by the base rate cut in the coming months. This would be a great opportunity for savers to review their accounts and switch if they feel they are not being rewarded for their loyalty. Savings providers will need to work hard to ensure they are offering their customers a fair deal and act quickly to adjust their market position against their peers.”