The bad news for savers and those holding cash on deposit could even worsen in coming months, warns data provider Moneyfacts.
NS&I, a key savings provider, will make sweeping cuts to most of its savings products from 24 November. The Direct Saver account will drop from 1% gross to 0.15% gross and 3 year Guaranteed Income Bonds will fall from 1.25% gross to 0.36%.
Latest Moneyfacts data shows:
•The average one-year fixed bond rate has fallen to 0.61%, less than half of the rate recorded a year ago (1.28%) and a fall of around a third (0.24%) over six months, from 0.85%.
• Mixed rises and falls were recorded across savings rates month-on-month. Not all rates are at the record lows seen in August but easy access ISAs have dipped below.
• Product choice fell slightly month-on-month with 1,517 savings deals (including ISAs) on the market, the first fall since July and 389 fewer deals available than a year ago.
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Savings market analysis – average rates |
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Nov-19 |
Aug-20 |
Oct-20 |
Nov-20 |
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Average easy access rate |
0.62% |
0.22% |
0.23% |
0.22% |
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Average easy access ISA rate |
0.87% |
0.32% |
0.35% |
0.31% |
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Average notice rate |
1.08% |
0.48% |
0.53% |
0.50% |
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Average notice ISA rate |
1.15% |
0.52% |
0.54% |
0.54% |
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Average one-year fixed rate bond |
1.28% |
0.63% |
0.68% |
0.61% |
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Average longer-term fixed rate bond* |
1.54% |
0.84% |
0.93% |
0.87% |
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Average one-year fixed rate ISA |
1.21% |
0.56% |
0.62% |
0.58% |
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Average longer-term fixed rate ISA* |
1.35% |
0.75% |
0.85% |
0.76% |
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*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 |
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Rachel Springall, finance expert at Moneyfacts, said: “The competition seen throughout September appears to have been short-lived as providers adjusted their offerings during October, impacting product choice and rates.
“The average return has since fallen to a new low of 0.61%, fuelled by numerous top deals experiencing cuts, such as those from challenger banks.
“One area of the market to see little change last month was the easy access arena, but we could see some deals adjusted in light of the rate cuts soon to come from NS&I this month.
“Consumers continued to put cash into easy access accounts rather than fixed, with the latest Bank of England statistics showing that the inflow into interest-bearing sight deposits hit £6.5bn during September, a substantial rise from £2.4bn in August.”