The Bank of England’s decision to drop the base rate has officially fuelled the fire of rate cuts across the savings market, making August the worst month of the year for cuts which total a devastating 354, compared to just 3 rate rises. This means that for every rate rise during the month there were 118 cuts.

The latest analysis from Moneyfacts.co.uk can reveal that some providers made cuts that were over five times as much as the 0.25% base rate cut*, and 53 of the cuts made were over 0.25%. This has sent average savings rates plummeting to new lows, with the majority of average rates paying half what they did five years ago.

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“Savers have once again shouldered the burden of a base rate cut, but the sad fact is that rates were already at appalling lows long before the Bank of England slashed base rate to 0.25%. Consecutive years of Government lending initiatives meant that the banks lacked a desire for savers’ deposits, resulting in an obvious lack of competition in the market.

“The base rate now sits at its lowest level in over 300 years and has just given providers another excuse to slash rates. Worse still, there are savings deals being completely withdrawn from the market during August, with 20 best buy deals** gone.

“Despite an onslaught of cuts being made during August, savers would be wise to brace themselves for more cuts to come, particularly to best buy deals where providers may struggle to cope with demand.

“It’s clear to see that savers have been left devastated by persistent rate cuts across the market and will struggle to find decent returns for their cash in the immediate future.”

*For example, United Bank UK cut its 7-year bond down from 2.12% to 0.82%.

**Savings deals that were the best or in the top 10 of their sector.

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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