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.”
Source: Property 118