Banks slash savings rates
Fixed-rate savings accounts have had the biggest monthly cuts in more than a decade as banks pass on expectations of falling interest rates.
The average one-year fixed-rate bond has dropped from 5.36pc to 5.13pc, according to Moneyfacts, an analyst.
This represents the largest month-on-month drop since February 2009.
One-year Isas fell from 5.2pc to 4.99pc – their biggest monthly fall since February 2013.
Longer-term fixed rates have also been coming down sharply. For bonds they slipped from 5.02pc to 4.76pc on average, while for Isas the reduction was from 4.92pc to 4.65pc.
Rachel Springall, finance expert at Moneyfacts, said: “The savings market experienced an onslaught of fixed-rate cuts month-on-month, with average fixed rates dropping to their lowest levels in almost six months.
“The average rates across one-year and longer-term fixed bonds and fixed Isas fell by levels not seen in over a decade. Longer-term fixed bond and Isa rates are experiencing bigger monthly cuts than their one-year fixed counterparts.”
She said the fixed-rate cut momentum was “disheartening news to savers” but they “may be wise to shake any apathy and act quickly to take advantage of the latest top rates”.
ICICI Bank announced a wave of cuts across its entire fixed-rate range this morning, taking off 0.4 to 0.6 percentage points.
Ford Money withdrew their one year deal yesterday and reissued it today, while Sainsbury’s Bank cut their Isa rates today.
James Blower, of the Savings Guru, also urged savers not to wait if they want to secure a high rate.
He said: “Rates are not going to rebound upwards; they’re only going to fall further. Rates are already above where they should be so my advice would be: don’t think about what you could have had three months ago.
“What you can get today is going to be significantly higher than what you can get in January and February.”
Mr Blower said fixed rates were much higher in August because markets had been predicting interest rates would hit 6.25pc.
Interest rates are now expected to have peaked at 5.25pc and markets are forecasting cuts next year.
Easy-access savings rates have remained broadly stable in the past month as they are influenced by the current Bank Rate, which has been unchanged since August.
The average easy-access savings rate was 3.17pc in December, while the average easy access Isa rate was 3.31pc.
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