Savers stored £3.5bn into interest-paying easy access accounts in February, over half of the money deposited into banks by customers, data reveals.
After a fifth consecutive month of rises, Brits put £6bn into their accounts with building societies and banks, according to the Bank of England’s figures.
Meanwhile, the amount saved in fixed-term accounts was far less, rising by just £0.1bn in the same period.
It follows the average rate on a fixed account falling to 4.46%, during a period when the average easy access rate shot up to 2.11%.
Mark Hicks, head of active savings, Hargreaves Lansdown says the appeal for easy access accounts “is obvious”.
‘Easy access account most sensible for emergency fund’
Hicks said: “They’re offering some of the best rates on the market, and savers like having the money to hand in case they need it.
“However, while easy access is the most sensible home for your emergency fund, if you don’t need the money for a period, it’s well worth considering a fixed rate savings account.”
Hicks also lauded one-year fixed accounts which “had the biggest rate resurgence in recent weeks” and believed there is still value to be had even if base rate cuts are on the horizon from the Bank of England.
Hicks added: “Not only that, but they lock in the rate now, so you’ll still be getting a strong return even after those rate cuts materialise.”
Elsewhere, house purchase mortgage approvals rose by 8% to 60,400 in February, and remortgage approvals rose 22% from 30,900 to 37,700 month-on-month.
Homeowners borrowed £1.5bn of net mortgage debt in February compared to £1.1bn in January.
The average interest rate on newly drawn mortgages fell by 29 basis points to 4.9% compared to the previous month.
Customers are gaining confidence after recession
Simon Gammon, managing partner at Knight Frank Finance, said: “The recovery in housing market activity is taking hold despite an uncertain start to the year for mortgage rates. Hotter-than-expected inflation data in January and February prompted a few lenders to notch up mortgage rates, which knocked sentiment, but not enough to kill the market’s momentum.”
Inflation rose by 3.4% in February. As inflation continues to exceed the Bank of England’s 2% target, the bank voted to keep the base rate at 5.25%.
The average two- and five-year fixed rates, meanwhile, remain stable at 5.8% and 5.38% respectively, according to Moneyfacts.
“More dovish tones from the Bank of England at the March meeting will underpin more increases in lending during the months ahead,” said Gammon. “And I wouldn’t be surprised to see approvals for house purchase moving above the 70,000 mark we were seeing during 2019 a little later this year.”
“Speculation over when the first base rate cut will arrive is giving consumers the confidence to act,” he added.
