The number of savings accounts has exceeded 2,000 options and is at its highest level since May 2012, according to the Moneyfacts UK Savings Trends Treasury Report.
Overall product choice rose month-on-month to 2,014 savings deals (which includes ISAs), which is the highest count since the 2,020 that were available in May 2012.
The number of savings providers also rose, hitting 144 and up from 139 last month. This is the highest count on Moneyfacts’ records (which started in February 2007). Interestingly, there were far fewer savings providers in May 2012, at 116, which was when product choice last exceeded 2,000 options.
Easy-access rate changes
The average easy-access rate fell month-on-month to 3.11%, while the average notice rate rose to 4.29%. The average notice rate pays 1.18% more than the average easy-access rate, which is the biggest difference in six months – in January 2024, the easy-access rate was 3.15% and the notice account rate was 4.38%, which is a difference of 1.23%.
The average easy-access ISA rate rose month-on-month to 3.32%, and the average notice ISA rate rose to 4.19%. The latter pays 0.87% more than the average easy-access ISA rate, which is the biggest difference in six months (in January 2024, the easy-access ISA rate was 3.25%, while the notice ISA rate was 4.18% – a difference of 0.93%).
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Notice accounts and notice ISAs are a more niche area of the savings market, but given the average interest rate difference compared to easy-access accounts has moved up to its highest point in six months, these could earn a bit more interest for savers who don’t need instant access to their cash.
However, if the rumours of a base rate cut by the Bank of England in August are true, then accounts with variable rates could undergo reductions. Therefore, a fixed rate bond or ISA might be a better option for savers, as the average one-year and longer-term fixed rates for these rose month-on-month.
Fixed bond rates rise
The average one-year fixed bond rate rose to 4.65%, which is its highest point since January 2024, when it was 4.87%. The average longer-term fixed bond rose to 4.16%, its highest point since January 2024, when it was 4.46%. The difference in rate between the average one-year and longer-term fixed bond is 0.49%, and the one-year bond pays a higher average return.
Fixed ISA rates up
The average one-year fixed ISA rate rose to 4.44%, while the average longer-term fixed ISA rate rose to 4.08%. The difference in rate between the average one-year and longer-term fixed bond is 0.36%.
Variety of providers ‘has reached a record high’
Rachel Springall, finance expert at Moneyfacts, said: “Savers may be pleased to see that not only has product choice risen to its highest point in over 12 years, but the variety of savings providers offering accounts has reached a record high.”
She continued: “There were far fewer providers on the market in 2012, and the savings landscape has changed significantly over the years. The average one-year fixed ISA rate has surpassed the longer-term equivalent since the start of August 2023, but a guaranteed return over the next few years may become more appealing should interest rates fall in the coming months.
“As it stands, savers would be wise to utilise both their Personal Savings Allowance (PSA) and ISA allowance, but keep in mind that the newly formed Government could review these areas and introduce other ways to instil the savings habit for consumers on lower incomes.”
