You are here: Home - Saving & Banking - News -

Savings rates halved during coronavirus

Written by: Emma Lunn
Average savings rates are at their lowest point since its electronic records began in 2007, according to Moneyfacts.

Since the start of March, the impact of the coronavirus and subsequent base rate cuts have seen average returns on savings accounts plummet.

Moneyfacts’ latest UK Savings Trends Treasury Report found that average savings rates have fallen for the fifth consecutive month.

The interest rates on easy access accounts, which remain a firm favourite with savers, have halved, from an average of  0.56% in March to just 0.22% in August.

The typical rates paid on notice accounts and their ISA equivalents, and one-year fixed ISAs have also halved since March.

Notice accounts paid an average of 1% in March but the typical rate is just 0.48% now.

The average rates paid on one-year fixed bonds, longer-term fixed bonds and longer-term fixed ISAs have reduced by at least a third in the same time period.

For example, one-year fixed bonds paid an average rate of 1.15% in March but the typical rate now stands at 0.63%.

Rachel Springall, finance expert at Moneyfacts, said: “As the UK enters a recession for the first time in 11 years, consumers may be looking to put aside some cash for an emergency fund in response. Since the UK lockdown, savings rates have plummeted to record lows across the board, so prospective savers may be disheartened with the current rates on offer.

“The impact of the coronavirus pandemic and subsequent base rate cuts has caused a rate-cutting trend among savings providers and while this is expected to slow down, there are few signs of the market making a U-turn any time soon. Choice is also limited, and despite a small rise to the number of savings account options including ISAs month-on-month, there are 366 fewer options than there were at the start of March 2020.

“Challenger banks may still attempt to entice new savers over the short-term to fund their future lending – proven in recent weeks by one-year fixed bond competition in the top rate tables – but it is unknown whether this will continue over the coming months. The average one-year fixed bond rate has fallen by more than a third since the start of March, so even if a few deals improve, there will need to be a market-wide movement to return to the rates seen pre-lockdown.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Seven ways to get help with energy bills this winter

We knew today’s announcement was going to be painful, but it’s still a shock to the system. When this kick...

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week