Glimmer of hope for savers as standard account rates rise
All non-ISA account interest rates have risen for the first time since July 2015 and the average long-term rate has risen to 1.44%, the highest rate seen since August 2016, according to data site Moneyfacts.
Its UK savings trends treasury report reveals the following average rates in July 2015, June 2016, May 2017 and June 2017:
|Average No Notice Account||0.66%||0.57%||0.37%||0.38%|
|Average Notice Account||0.82%||0.81%||0.52%||0.55%|
|Average One-Year Fixed Rate||1.42%||1.19%||0.98%||1.00%|
|Average Long-term Fixed Rate||2.00%||1.63%||1.40%||1.44%|
|Source: Moneyfacts Treasury Report|
Charlotte Nelson, finance expert at Moneyfacts, said the savings market may finally be moving in the right direction again, even though the rate increases are small.
“The savings market is nonetheless showing signs of positivity, as providers try to attract savers in all areas of the market,” Nelson said.
“However, celebrations might be short-lived when this month’s increases are given a closer look, as the biggest providers have yet again failed to show up to the party. With the majority of the rate increases once again being fuelled by challenger brands trying to vie for the top spot, it’s likely that the rate rises will remain small until the high street banks join in on the action.”
Nelson said that the rate rises are also at odds with the ever-increasing uncertainty in the UK economy.
“Many are predicting that a base rate rise will be pushed back even further into the future due the instability of the economy over Brexit and the effects of a hung Parliament.
“Inflation is now the biggest killer to savers’ interest, with negative interest a reality for most and no cash savings account currently able to keep up with the pace of inflation. With CPI predicted to rise further, savers will continue to struggle in the cash savings market, in effect cancelling out any positive gains witnessed this month.”
Moneyfacts said savers will still have to work hard to get a decent return on their cash and anyone sitting on a rate of 0.25% could be much better off by shopping around for a best buy option, though they may need to move away from high street offerings to see a difference.