UK Variable Savings Interest Rates Fell in the run-up to Base Rate Rise

By: MoneyFacts

Moneyfacts UK Savings Trends Treasury Report data, yet to be published, reveals that average variable rates fell in anticipation of a base rate rise by the Bank of England. This was the first time since April 2017 that the majority of variable rates had experienced a fall.

Charlotte Nelson, Finance Expert at Moneyfacts, said:.

“This month, the growth the Savings Treasury Report has been reporting recently slowed down due to a reduction in the variable rate market, which sees both the average easy access account and easy access ISA rate fall for the first time since April.

“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.

“This trend is backed up by the latest data from Bank of England which reveals an increased flow of money coming out of fixed rate bonds. This shows not only that savers are reluctant to lock their cash away, but that many savers have perhaps been stashing their cash in an easily accessible place in preparation for a base rate rise.

“Savers had hoped that 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.”

The Moneyfacts UK Savings Trends Treasury Report, out later this month, is a comprehensive monthly overview of current and historical data for the savings and investment market, incorporating written commentary alongside graphs and tables highlighting key trends.

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