The average savings rates dropped across the board in January, causing the biggest month-on-month cuts for almost 15 years, data reveals.
As part of widespread falls, the average easy access rate slipped to 4.38%, signifying the first monthly drop since February 2022.
The average fixed rate bonds plummeted below 5% for the first time since July last year, slipping from 5.13% to 4.87%. According to data from Moneyfacts’ UK Savings Trends Treasury Report, this is the heftiest month-on-month drop by savings providers for almost 15 years.
Meanwhile, one-year fixes and longer-term equivalents dipped to 4.72% and 4.32% respectively, representing both accounts’ biggest month-on-month cuts since March 2009.
Further, savers looking for an easy access rate can expect an average price of 3.15%, a slight dip from 3.17%.
The number of products on the market also decreased, dropping from 1,415 in December to 1,342 in January. But, compared to January 2022, there are over a hundred more now and rates are on average, drastically higher. So, savers hoping to get generous returns on their funds still have ample money-making opportunities.
Fixed rate bond cuts will ‘no doubt come as a shock for savers’
Rachel Springall, finance expert at Moneyfacts, said: “The significant cuts seen across fixed rate bond and fixed ISA rates month-on-month are the biggest recorded in almost 15 years. This will no doubt come as a shock for savers who use these accounts to earn a guaranteed return on their hard-earned cash and have waited a couple of months to invest.
“However, despite these falls, it is worth noting that average rates are higher than they were at the start of 2023, so many coming off a fixed rate will find better returns today if they want to lock into a deal of a similar term. Longer-term fixed rates are currently returning less than one-year options on average, but with interest rates expected to fall this year, some savers may decide to fix for longer.
Springall added: “Savers who prefer to keep their cash closer to hand will find easy access variable rates are much higher now than they were a year ago, but returns have dipped slightly month-on-month. Savings providers will no doubt be aware of the ongoing murmurings of the Bank of England base rate coming down in 2024, but even if this doesn’t occur for the next few months, variable rates can still change.
“A new ISA season should also bring a flurry of activity from providers and, due to the interest rate rises of 2023 and upcoming ISA reforms, they may be in more demand from savers who are close to breaching their Personal Savings Allowance (PSA). Savers will need to consider all the different account options available to them to suit their short or long-term goals and move swiftly to take advantage of the top rates.”
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