Savings UK: Rates halved during lockdown – what this means for your money | Personal Finance | Finance
Savings rates are of particular importance to the millions of Britons who choose to put their money away in various forms of saving each year. For those who are looking to grow their money, a solid or high savings rate is beneficial. However, the impact of the COVID-19 crisis has clearly taken its toll on savings throughout the UK, with the average rates painting a dire picture.
The latest research from Moneyfacts has shown average rates have fallen for the fifth consecutive month, in bad news for savers.
Taking a particular hit are easy access accounts, which are a particular popular option for saving, as Britons can withdraw money as they choose.
On these accounts, the average rates have halved from a 0.56 percent average in March, to 0.22 percent in August.
Indeed, there have also been implications for those choosing to save through an ISA.
READ MORE: Money saving tips: Savvy saver reveals ‘life-changing’ advice
She said: “As the UK enters a recession for the first time in 11 years, consumers may be looking to put aside some cash for an emergency fund in response.
“Since the UK lockdown, savings rates have plummeted to record lows across the board, so prospective savers may be disheartened with the current rates on offer.
“The impact of the coronavirus pandemic and subsequent base rate cuts has caused a rate cutting trend among savings providers.
“While this is expected to slow down, there are few signs of the market making a U-Turn any time soon.”
In March, the Bank of England took the decision to lower its base rate to unprecedented levels.
The central bank cut its interest rate to 0.1 percent – the lowest in its history.
This decision had major implications and a knock on effect for many providers, who in accordance, and with the pressures of COVID-19, also lowered their rates.
The bank’s Monetary Policy Committee (MPC) voted unanimously in favour of the rate cut.
The action was one of the first taken by the new Governor of the Bank of England, Andrew Bailey.
Mr Bailey has also refused to rule out lowering the base rate again into negative interest rates – a decision which would have widespread implications for the country.
Speaking to the Treasury select committee, Mr Bailey said: “Of course, we’re keeping the tools under active review in the current situation. We do not rule things out as a matter of principle.
“We’re very keen to observe how the economy responds to the rate cuts we have made.
“We have been looking very carefully at the experience of those other central banks that have used negative rates.”