Savings rates continue to dip

Saving-money-in-a-piggy-b-002Returns on savings accounts have shown a significant decline over the past few months.

According to research carried out by Moneyfacts, the personal finance website, the returns on savings accounts have been marked by a noticeable drop since last November.

The best rates on instant access savings accounts have dipped, on average, from 3.35 per cent to 3 per cent.

The news is the same for fixed-term one-year bonds; here the top rates have fallen, on average, from 3.95 per cent to 3.3 per cent.

With the base rate marooned on 0.5 per cent, many lenders are finding it difficult to turn a reasonable profit on savings.

And with the housing market showing some signs of muted recovery, banks and building societies have been concentrating on attracting borrowers who are more lucrative.

Michelle Slade of Moneyfacts said: “Despite providers having many more savers than borrowers, it is savers who are being neglected, with those who rely on their savings to supplement their income being hardest hit.

“It is already virtually impossible for savers to find an account paying a positive real return after tax and inflation, and falling savings rates are only going to exacerbate the situation.”

Kevin Mountford of the comparison website added: “It is getting increasingly difficult for banks to make money on a savings rate of 3 per cent when the base rate is 0.5 per cent.”

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