The rate cuts come in the wake of the Bank of England shaving the base rate from 5.25% to 5% last month – the first cut in four years.
Moneyfacts found that the average easy access savings account rate fell month-on-month from 3.14% to 3.07%, while the average notice rate fell from 4.3% to 4.23%.
It revealed that easy access accounts recorded their biggest month-on-month drop since April 2024.
ISA rates are down too. The average easy access ISA rate fell month-on-month from 3.36% to 3.29%, while the average notice ISA rate fell from 4.22% to 4.08%.
Moneyfacts also found that the average one-year fixed bond rate fell from 4.63% to 4.43%, and the average longer-term fixed bond fell from 4.13% to 3.99%. The difference in rate between the average one-year and longer-term fixed bond stands at 0.44%, with the one-year bond paying a higher average return.
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Savings product choice declines
Product choice overall fell month-on-month to 2,000 savings deals (including ISAs). The choice of cash ISAs fell slightly to 553 deals, while the number of savings providers fell by one to 143 month-on-month.
Rachel Springall, finance expert at Moneyfacts, said: “Savings rates fell across both variable and fixed sectors in August, which is the first time all rates dropped since the start of 2024. The downward path was perhaps an inevitable direction after the Bank of England base rate was cut, but it can take a few weeks for providers to make a move in response.
“The savings market was also unsettled by a contraction in product choice month-on-month, but there remains a healthy variety of choice. Savers may have been concerned about deals disappearing from the market, in particular for fixed rate bonds which guarantee interest.”
Springall added that the average shelf-life of a fixed rate bond has not dropped, with many providers opting to keep their products on sale, but to re-adjust the rates they are prepared to pay.
“As a result, the average shelf-life of a fixed rate bond rose to its highest point since May 2022 (53 days), to 51 days, up from 40 a month prior. However, those looking to lock in for longer will find the average longer-term fixed bond rate dipped below 4% for the first time since April 2023,” she said.
She added that for savers who have not yet reviewed their savings accounts, they “would be wise to do so, to ensure they are still paying a competitive return”.
