Scant consolation for savers as banks cut accounts within hours of the Bank of England slashing the base rate
Banks and building societies have been quick off the mark to slash savings rates. Within hours of the Bank of England dramatically reducing its base rate by twothirds to 0.25 per cent last Wednesday, rates had already started to fall.
However, savers could now find they earn even less than the last time the Bank’s base rate was this low.
Back then the average easy-access savings rate was 0.7 per cent before falling to 0.4 per cent over the following few months.
This time, before any cuts had been announced, the average was already only a whisker higher at 0.5 per cent.
Within hours of the Bank of England dramatically reducing its base rate by two-thirds to 0.25 per cent last Wednesday, savings rates had already started to fall
It means that following this next round of cuts, savers could soon be earning close to zero. Already, four of the top easy-access accounts have disappeared, while fixed rates have gone into freefall.
Lloyds, Halifax, Santander and Nationwide have all said they are reviewing their savings rates. Big providers tend to announce new rates at the start of the month following any Bank of England cut — so April in this case.
When the base rate stood at 0.25 per cent between August 2016 and November 2017, HSBC paid its Flexible Saver account holders just 0.01 per cent.
James Blower, founder of The Savings Guru, says: ‘Savers are in for a rough few months.’ Rachel Springall, finance expert at Moneyfacts, adds: ‘It seems almost inevitable that the base rate reduction will be passed on to savers in full over the next few months.’
Co-op Bank has already closed its Britannia Select Access Saver account at 1.3 per cent, replacing it with a new version offering 0.8 per cent.
Yorkshire BS has pulled its One Year Limited Access Saver at 1.32 per cent, while Principality’s Online Saver paying 1.28 per cent has also disappeared in favour of a 0.9 per cent deal. So is there anywhere left for savers to turn?
The top easy-access account is currently Marcus by Goldman Sachs, and pays a variable 1.3 per cent, but this could soon be cut.
Virgin Money pays a slightly higher 1.31 per cent on its Double Take E Saver, but restricts you to making two withdrawals a year.
Cynergy Bank also pays 1.31 per cent, including a bonus for the first 12 months, after which the rate drops to 0.75 per cent.
Savers looking to tie up their money will also need to act quickly. As top short-term bonds disappear, other providers will find themselves at the top of the best-buy tables, and cut rates to avoid bringing in more money than they can lend.
OakNorth Bank, which is often to be found among the best payers, has already cut its one-year fixed deal from 1.5 per cent to 1.15 per cent. Ford Money has closed its 1.55 per cent offer and replaced it with one at 1.15 per cent.
Only Shawbrook Bank and Investec Bank still pay 1.55 per cent — the top rate on offer for one year online. In the High Street, Metro Bank still pays 1.4 per cent.
Savers with National Savings & Investments could see more rate cuts on top of those due in May after the Government slashed its funding for the next financial year.