Two base rate cuts in March has impacted on the easy access market with the average rate falling from 0.56% in March to 0.51% at the beginning of April and now stands at 0.44%.
Lloyds Bank, Halifax, Scottish Widows Bank and NatWest have cut easy access rates to just 0.01%.
The month of April brings a new tax year, however the much-anticipated ISA season quickly fizzled out. At the start of March there were 90 ISA providers offering 417 accounts, by the end of the month, there were 86 providers offering 340 products, a fall of almost a fifth of the market.
ISA Interest rates have also fallen, with the average easy access ISA rate at 0.79% – the biggest month-on-month drop since November 2019.
| Savings market analysis | ||
| Product numbers and rates | Mar-20 | Apr-20 |
| Number of live savings account options (including ISAs) | 1,768 | 1,588 |
| Number of live ISA options | 417 | 340 |
| Average easy access rate | 0.56% | 0.51% |
| Average easy access ISA rate | 0.83% | 0.79% |
| Average interest rates based on a £5,000 deposit as at the start of the month. Source: Moneyfacts Treasury Reports | ||
Rachel Springall, finance expert at Moneyfacts, said: “Savers will be disappointed to find that deals are being pulled left, right and centre, and this vanishing act is clearly due to the base rate cuts last month and uncertainties surrounding the Covid-19 pandemic.
“Providers are perhaps struggling to sustain their lucrative offerings or are pulling deals because they have crept up the top rate tables unexpectedly, resulting in a domino effect of cuts or withdrawals.
“We have not seen such sights since 2012, and this stark drop in savings products echoes when the Funding for Lending Scheme took its toll on the savings market – whereby providers no longer felt the need to rely on their savings deposits to fund their future lending.
“The Term Funding Scheme, which came into being in 2016, and the most recent Term Funding Scheme with additional incentives for SMEs scheme (TFSME) launched recently will no doubt continue the legacy of a less competitive savings market for the next four years, as providers are able to borrow cheaply from the Government.
“These changes may well be just the beginning, as it can take up to three months for a base rate change to be passed onto savings accounts, and today yet another big bank brand decided to slash its easy access rates to a disappointing 0.01% (based on a £10,000 deposit) – NatWest.
“This joins Halifax, Lloyds Bank and Scottish Widows Bank, which also pay 0.01% today based on a £10,000 deposit after making cuts in March.”
