Interest on savings accounts reaches new lows

Over 900 cuts to savings rates have occurred since the beginning of the year, compared to just 111 rate increases, research from financial analyst group Moneyfacts has found.

The data reveals that the average interest rate for easy access savings accounts has fallen from 0.64% in January to a current rate of 0.56%.

Additionally, the rate for one-year fixed-rate bonds has fallen from 1.43% to 1.15% during the same period.

Those putting money into fixed-rate bonds for two years receive, on average, a rate of 1.39% now, compared to 1.79% at the beginning of the year, the research suggested.

Returns for individuals saving in a five year bond is now 2%, compared to a rate of 2.63% at the start of 2016.

The findings come as speculation over whether the Bank of England (BoE) will cut interest rates grows.

Mark Carney, Governor of the BoE, has indicated that a cut in interest rates could occur in the near future in response to the economic uncertainty generated by the UK’s recent vote to leave the EU.

Charlotte Nelson, finance expert at Moneyfacts, commented: ‘Savers have been fighting an uphill battle to get a decent return in the first half of this year.

‘Mark Carney’s announcement that the BoE base rate could fall past its record low of 0.5% in the near future means that savers need to brace themselves for even tougher times ahead.’