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Savings rates suffer biggest fall in over 10 years

Savings rates suffer biggest fall in over 10 years
Christina Hoghton
Written By:
Christina Hoghton

Just as many savers were beginning to enjoy inflation-beating deals, savings rates have started to fall again.

Both fixed rate bonds and ISAs have experienced the sharpest month-on-month rate cuts recorded in over a decade, according to Moneyfacts.

The average one-year fixed rate bond fell to 5.13%, the biggest monthly drop since February 2009.

The average longer-term fixed bond fell for the second month running to 4.76%, its biggest month-on-month drop since December 2012.

Easy access savings rates fell too, for the first time since September 2021, to reach 3.17%, the first fall since September 2021.

Rachel Springall, finance expert at Moneyfacts, said: “The fixed rate cut momentum may well come as disheartening news to savers, but they may be wise to shake any apathy and act quickly to take advantage of the latest top rates.

“Indeed, the average shelf life of a fixed rate bond fell to 28 days, down from 36 days a month prior. This shelf life is now at its lowest point since July 2023.”

Product availability ticks down

There was a fall in the number of available products over the last month, Moneyfacts revealed.

Product choice overall fell month-on-month to 1,918 savings deals (including ISAs) from 1,968 last month.

The number of live savings accounts that pay more than the Bank of England base rate (5.25%) also fell month-on-month.

At the start of November 2023, around 20% of live savings accounts could beat 5.25%, but there are now fewer than 10%.

Springall added: “As savings rates drop, it is imperative consumers take time to check their existing accounts and ensure they are being paid a competitive return.

“As it stands, savers will find some of the best returns are on offer with building societies and challenger banks, so it’s worth keeping a close eye on the market and compare deals carefully.”

Not all bad news

There were still some instances of rising savings rates in December, Moneyfacts added.

For example, the average easy access ISA rate rose month-on-month to 3.31% – its highest level since December 2008 (3.74%).

The average overall notice rate rose to 4.43% and stands at its highest point on Moneyfacts’ records.

And the average notice ISA rate increased to 4.22% – a 15-year high.