Record low rates add to pressure piled on savers

SAVERS face yet more misery as fixed rates plunge to a record low and deals disappear.

A typical account with a fixed rate for 12 months now pays less than half what it did a year ago, latest research shows.

In November 2019, the average one-year bond paid 1.28 per cent compared to only 0.61 per cent in the same month this year, according to data analysts Moneyfacts.

It is a fall of around a third in the past six months alone, down from 0.85 per cent in June.

The average easy-access Isa rate has also dipped below the previous record low of 0.32 per cent in August to just 0.31 per cent.

Longer fixed deals and notice accounts pay a smidgen more interest than they did in the summer but average rates are still well below last year.

Savers also have far less choice, with 389 fewer savings deals up for grabs compared to this time last year. There are now 1,517 offers on the market, said Moneyfacts.

Savings rates have plummeted since the Bank of England cut the base rate to just 0.1 per cent in March, with many major banks paying even less. Any hope that rates might creep back up was wiped out this month when the Bank pumped another £150billion of emergency funds into the financial markets. This means banks will not need to offer top deals to attract cash from savers.

Last week, the Financial Conduct Authority dealt savers a further blow by shelving plans to help protect loyal customers with a minimum interest rate.

More pain is also on the way for millions of National Savings & Investments customers, with severe rate cuts set to hit this month.

Rachel Springall, finance expert at Moneyfacts, said: ‘The competition seen throughout September appears to have been short-lived as providers adjusted their offerings during October, impacting product choice and rates. Consumers may well be looking to secure a fixed deal, but speed is key.’

Moneyfacts warned that savers typically have just 39 days to take advantage of a fixed deal before the offer is pulled.