Rachel Springall, Finance Expert at Moneyfacts, said:

“Savers may be encouraged to see the array of providers and overall choice of deals has reached a record high. The steady rise of challenger banks has been a big contributing factor over recent years, and the variety of accounts to land onto the market can be useful for customers who have diverging needs. However, the recent cut to the Bank of England base rate may well dampen such growth in product choice and new rivals, as it has led to cuts to variable savings rates. As a result, the average easy access and notice rates, as well as their cash ISA counterparts, have fallen to their lowest levels in almost two years.

“Those savers who prefer to secure a guaranteed return may wish to note the falls to the one-year and longer-term fixed bond and cash ISA rates month-on-month, with all rates apart from the one-year fixed bond, sitting below 4%. The steady repricing of fixed bonds included some that had been on sale for some time, which has led to a rise in the average shelf-life of a bond to 49 days, up from 36 days a month prior. Providers have been monitoring movements in swap rates to gauge future rate expectations, but they must balance cuts or rises against their deposit funding targets.

“It is evident that cash ISAs are highly sought after, with the latest statistics from the Bank of England revealing a record monthly high of deposits of around £14bn during April. The noise surrounding cash ISA reforms and the rush of savers looking to protect their hard-earned cash from tax would have been a key influence in the significant deposits. The popularity of cash ISAs is expected to linger, as millions of people are expected to pay higher-rate tax at 40% this tax-year. Thankfully the choice of cash ISAs continues to thrive, reaching a new record high this month. Providers must continue to work hard to support their new and existing customers and savers must ensure they stay within their Personal Savings Allowance (PSA) and take full advantage of their ISA allowance when reviewing their pots or shopping around for a new deal.”