Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:

“Savers may be disappointed to see savings rates fall, but in positive news there has been a bit of life injected into the market as more providers enter the fray. Product choice now stands at its second highest level on our records and the variety of savings providers has reached a record high. These moves could instil a sense of optimism for savers who feel let down by the more familiar high street banks, as new challengers are more eager to attract deposits to fund their future lending. However, the months ahead will be challenging for both providers to keep abreast of rate adjustments and for savers to move quickly to secure a new deal.

“Fixed rates have been on the downward trend and, as a result of providers adjusting their rates or indeed market positions, the average shelf-life of a fixed rate bond fell to 35 days month-on-month, its lowest point since the start of March this year. This emphasises the necessity for savers to move quickly if they want to secure a lucrative guaranteed return on their cash. In recent weeks the swap rate market has been volatile, which will cause providers to consider their pricing, such as with fixed bonds. However, while fixed bond rates are down month-on-month, the longer-term cuts are not as sharp as they have been on one-year fixed.

“Easy access savings accounts continue to be the evident casualty of interest rate cuts by the Bank of England, and the average rate now stands at its lowest point since September 2023, when it was below 3% (2.95%). It is worth pointing out that there will be savers earning even less than this and, worryingly, some savers will not be earning a single penny on their cash. According to the Bank of England, £252bn is sitting in UK current or savings accounts earning no interest whatsoever. It will be up to consumers to make time to move their hard-earned cash into an account which not just pays interest, but also provides a real return against the eroding impact of inflation, which is expected to stay above 2% for some time yet.”