Savers told to act now as rates set to fall over summer
Rates still look attractive, but they are expected to fall over the next couple of months as the summer lull kicks in.
Banks slash rates or remove deals altogether when they don’t need as much money to cover their lending requirements, which tend to dip over the summer months as borrowers and mortgage brokers go on holiday.
Speculation about a base rate cut, particularly in the event of a no-deal Brexit, could also see providers replacing top rates with lower-paying versions.
Kevin Mountford, chief executive of savings platform Raisin UK, said: “We’re seeing a trend in savings interest rates decreasing across the board. The fact that we are almost coming up to a full year since the Bank of England last made a rate change, just goes to show that the wider market place rate is increasingly divorced from the Bank of England rate.
“Banks are typically changing rates depending on their lending business and the inflow needs they require as a consequence.”
Several top deals have already disappeared this summer.
PCF Bank’s market-leading 5-year bond paying 2.65 per cent was withdrawn on 1 July and not replaced. The best 5-year deal on offer now pays 2.60 per cent from RCI Bank.
Secure Trust Bank also pulled is 90 Day Notice account offering a table-topping 1.91 per cent at the start of this month. The best notice account now is 95 Days from Gatehouse Bank.
Meanwhile, ICICI Bank reduced a raft of rates last week, most notably its market-leading 3-year bond, which paid 2.4 per cent. The best deal is now 2.36 per cent from PCF Bank.
Tom Adams, head of research at rate monitoring firm Savings Champion, agrees savers should act immediately.
“With best buy accounts falling by the wayside and top rates being replaced with lower-paying versions without warning, savers would be advised to act quickly to take advantage of good deals,” he said.
“With rates coming down and little signs of this letting up in the short term, procrastination could be the enemy of the saver.”
However, he warns people not to commit to a deal based on rate alone.
“Don’t rush into something unsuitable; you still need to consider your options carefully and make sure that you don’t opt for an account that ties you in for a period where you may need the money,” he said.