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As Savers Demand Grows, Interest Rates Fall on Short-term Bonds

Personal_Finance / Savings Accounts Jan 15, 2018 - 11:26 AM GMT

By: MoneyFacts

Personal_Finance

Moneyfacts UK Savings Trends Treasury Report data (not yet published) shows that the average one-year fixed rate has fallen for the first time since January 2017.



Charlotte Nelson, Finance Expert at Moneyfacts, said:

“Positivity had started to grow in the one-year fixed rate market over the course of 2017, with the average one-year fixed rate seeing a small but positive increase for eight consecutive months. However, this month’s figures mark a halt to the positivity, with the first reduction in the average for a year. This is disappointing news for savers who were hoping that the base rate rise would bring some pizzazz back into the savings market.

“The challenger banks have been propping up the savings market for some time, but they will only offer a decent rate for their bonds if the rest of their business needs a financial boost. The reduction to the average one-year fixed rate this month could simply be a matter of the challenger banks dialling back their competitive efforts over the Christmas period.

“The Moneyfacts UK Savings Treasury Report also shows that despite the reduction to the average one-year fixed rate, consumer demand for the fixed rate bonds has increased by 3.30%. These were the only adult accounts to see heightened interest during the month of December. This is mirrored by figures released by the Bank of England, showing a flow of money into fixed bonds for the first time in six months.

“Savers may have chosen to hold back on tying up their cash in a fixed rate bond to wait and see what effect the base rate rise would have. However, with Moneyfacts’ consumer demand figures being positive, it is likely that savers feel rates have settled enough to commit to a fixed term.

“However, it is a little concerning that the moment savers feel comfortable enough to consider a fixed rate bond, rates start to fall, leaving many to wonder if this foreshadows the economic climate for 2018. Either way, savers will have to put their best foot forward and keep on top of the Best Buys to ensure competitive returns are maintained.”

The Moneyfacts UK Savings Trends Treasury Report, out later this month, is a comprehensive monthly overview of current and historical data for the savings and investment market, incorporating written commentary alongside graphs and tables highlighting key trends.

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.


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