Savers need “a miracle” as the market stagnates

1st February 2016


The savings landscape is going from bad to worse as new research highlights that since 2011, the average rate on a two-year fixed bond has almost halved from 3.2% to just 1.72% today.

A similar pattern can be seen on longer-term bonds, with five-year fixed rates recording a drop from 4.01% to just 2.59% over the same period.

Easy access deals have not been left unscathed from poor returns either, with a staggering 75% of the market paying 1% or less.

The analysis from shows that savings rates have been on a clear downward trajectory as a result of lending initiatives and an ultra-low bank base rate.

The group noted that while challenger banks continue to prop up the savings market, there is still an abundance of rate cuts across the board as providers remain reluctant to compete.

This reluctance means that pre-tax earnings on a £10,000 investment made into the average five-year fixed bond today would be £142 a year lower than if the same investment had been made in 2011.

Rachel Springall, finance expert at, said:  “Since the start of 2016, providers cut 140 rates, over six times the number they raised, which stood at a measly 21.

“Savers may find it difficult to spot any of the big five high-street brands in the savings best buys, which have been increasingly filled with the offerings of challenger banks.

“If savers are hesitant to invest with these more unfamiliar providers, they could potentially be avoiding the best deals.”

Springall added that with rates as low as they are today, it’s easy to see why savers may lack an incentive to save, particularly if they rely on their interest for supplementary income.

Consequently, they may be wise to look to alternatives instead, such as high interest paying current accounts, which have become increasingly competitive.

She said: “But with base rate set to stay low for some time yet and providers staying focused on pricing down their interest rates for borrowers, savers can do little but sit back and wait for a miracle to happen in the savings market.”

Five years ago Two years ago One year ago One month ago Today
Average easy access rate 0.84% 0.63% 0.66% 0.63% 0.63%
Average two-year fixed bond 3.20% 1.80% 1.74% 1.79% 1.72%
Average five-year fixed bond 4.01% 2.63% 2.49% 2.63% 2.59%
Source: 1.2.16



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