British savers handed September boost as rates climb to highest level in a decade
A new market analysis shared with City PM this weekend shows that the average rates being offered on some savings accounts have reached their highest level in nearly a decade.
At 0.84 per cent, the average easy access rate is at its highest since a rate of 0.87 per cent was recorded in December 2012.
A year ago, in September 2021, the average easy access rate was just 0.17 per cent.
Savers can typically get higher returns from an easy access Isa, which currently pays 0.92 per cent on average and stands at its highest point since September 2019 (when the average rate was 0.93 per cent), the report by , Moneyfacts.co.uk stressed.
And if they are able to lock their money away for a year, they could typically find a rate of 2.29 per cent by taking out a one-year bond, which has hit its highest average rate since November 2012.
Highest in nearly 10 years
The average one-year fixed Isa meanwhile has a rate of 1.96 per cent – the highest point since January 2013.
With the Bank of England recently increasing interest rates and further rises expected, the choice of savings products is also growing.
Moneyfacts counted 1,754 savings deals, including Isas, the highest total since early on in the coronavirus pandemic in March 2020, when 1,768 deals were available.
Despite the growth in average savings rates, cash savers will still find their returns wiped away by the impact of surging living costs, with Consumer Prices Index (CPI) inflation hitting 10.1 per cent in the 12 months to July.
However, rising savings rates will at least go some way towards offsetting the eroding impact of inflation on savers’ cash.
Rachel Springall, finance expert at Moneyfacts, said: “The average one-year fixed bond arena remains extremely competitive, with the average return breaching 2 per cent for the first time in a decade.
“Product choice across the savings spectrum also improved, getting closer to levels not seen since March 2020.”
Rachel Springfall
She continued: “The back-to-back base rate rises have had a positive influence on variable savings rates, and this, along with notable competition, has seen the average easy access rate rise to its highest level since 2012.”
But she added that not every account has improved, so it is vital that savers compare their existing accounts and take advantage of the current competition.
Ms Springall also pointed out that, while some savers may be looking to chase after fixed rates in the coming months, others may need the flexibility of being able to withdraw their cash to cover rising living costs.
She added: “To attract savers, providers will need to respond quickly to compete with their peers and offer a range of products to suit specific needs.”