Moneyfacts: Savings providers entering the fray hits a record high

Moneyfacts UK Savings Trends Treasury Report data shows more savings providers have joined the savings market, resulting in its highest count on record. Meanwhile, product choice stands at its second highest level on record, but average savings rates are on the downward trend.

• Product choice overall rose month-on-month to 2,076 savings deals (including ISAs), the second highest count on our records (starting February 2007). The choice of Cash ISAs rose slightly to 559 deals. The number of savings providers rose to 149, up from 142 last month, the highest count on our records.
• The average easy access rate fell month-on-month to 3.03%. The average notice rate fell to 4.20%. The average notice rate pays 1.17% more than the average easy access rate.
• The average easy access ISA rate fell month-on-month to 3.24%. The average notice ISA rate rose to 4.05%. The average notice ISA rate pays 0.81% more than the average easy access ISA rate.
• The average one-year fixed bond rate fell to 4.24%, its lowest point since June 2023. The average longer-term fixed bond fell to 3.89%, its lowest point since March 2023. The difference in rate between the average one-year and longer-term fixed bond stands at 0.35%, with the one-year bond paying a higher average return.
• The average one-year fixed ISA rate fell to 4.06%, its lowest point since June 2023. The average longer-term fixed ISA fell to 3.84%, its lowest point since April 2023. The difference in rate between the average one-year and longer-term fixed ISAs stands at 0.22%, with the one-year bond paying a higher average return.

Rachel Springall, Finance Expert at Moneyfacts, said:

“Savers may be disappointed to see savings rates fall, but in positive news there has been a bit of life injected into the market as more providers enter the fray. Product choice now stands at its second highest level on our records and the variety of savings providers has reached a record high. These moves could instil a sense of optimism for savers who feel let down by the more familiar high street banks, as new challengers are more eager to attract deposits to fund their future lending. However, the months ahead will be challenging for both providers to keep abreast of rate adjustments and for savers to move quickly to secure a new deal.

“Fixed rates have been on the downward trend and, as a result of providers adjusting their rates or indeed market positions, the average shelf-life of a fixed rate bond fell to 35 days month-on-month, its lowest point since the start of March this year. This emphasises the necessity for savers to move quickly if they want to secure a lucrative guaranteed return on their cash. In recent weeks the swap rate market has been volatile, which will cause providers to consider their pricing, such as with fixed bonds. However, while fixed bond rates are down month-on-month, the longer-term cuts are not as sharp as they have been on one-year fixed.

“Easy access savings accounts continue to be the evident casualty of interest rate cuts by the Bank of England, and the average rate now stands at its lowest point since September 2023, when it was below 3% (2.95%). It is worth pointing out that there will be savers earning even less than this and, worryingly, some savers will not be earning a single penny on their cash. According to the Bank of England, £252bn is sitting in UK current or savings accounts earning no interest whatsoever. It will be up to consumers to make time to move their hard-earned cash into an account which not just pays interest, but also provides a real return against the eroding impact of inflation, which is expected to stay above 2% for some time yet.”