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

Variable savings rates fell ahead of interest rate rise

0
Written by: Paloma Kubiak
20/11/2017
Average rates for variable savings accounts fell in the run up to the Bank of England Base Rate rise, research reveals.

This was the first time since April that the average easy access account and easy access ISA rates have fallen.

According to data site Moneyfacts, no notice rate (excluding ISAs) stood at an average 0.40% in November 2016, 0.37% in May 2017, 0.40% in October 2017 and 0.39% in November 2017.

Notice accounts (excluding ISAs) went from 0.68% in October 2017 to 0.66% in November. No notice ISA accounts stood at 0.63% in October, falling to 0.62% in November.

Given the fact that variable rates fell in anticipation of a Base Rate rise in November, Moneyfacts suggests providers may have been reducing rates in an attempt to minimise the effect.

Charlotte Nelson, finance expert at Moneyfacts, said: “While this fall in rates may simply be a case of poor timing, the fact that the recent Base Rate rise was almost seen as a foregone conclusion indicates that providers may have been reducing rates in an attempt to minimise any subsequent rate increases.

“Since the Base Rate rise, things have unfortunately not started to look any better for savers, with providers slow to announce changes and many not passing the full rate rise on. This all boils down yet again to the main banks simply not needing savers’ funds. To make matters worse, challenger banks who put their rates up and down on a regular basis seem not to use Base Rate as a marker.

“It’s not just providers who appear to have prepared for the base rate rise that occurred on 2 November – savers have too. Moneyfacts demand data shows that the amount people are looking to invest in fixed rate bonds has dropped almost 10% (-9.25%) from the previous month. Interestingly, the amount savers are looking to invest in variable rate accounts has increased by almost 5% (4.47%) over the same period.”

The latest data from the Bank of England also reveals an increased flow of money coming out of fixed rate bonds, showing that savers are reluctant to lock their cash away, and that they’ve been stashing their cash in accessible accounts in preparation for a Base Rate rise.

Nelson added: “Savers had hoped the rate rise by the Bank of England would inspire the banks to start offering a better return on their accounts. However, the reality is that savers are still going to have to work as hard as ever to get the best possible deals.”

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.

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...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

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