Savers still reeling from the Bank of England's decision to leave interest rates on hold last week have been dealt a fresh blow with the news that many of the best savings rates disappeared ahead of the vote.
According to the latest moneyfacts.co.uk research, several rate cuts have been made to Best Buy savings deals since the start of April, with some providers lowering their rates three times in the course of the month. Compounding matters, a number of top deals were withdrawn from the market entirely in the run-up to the base rate announcement, and have yet to be replaced.
*Tesco Bank easy access saver was cut three times between 6th April and 3rd May. Ikano Bank 1 year fixed bond cut twice between 12 April and 3 May. Selection of cuts and withdrawals appeared between 1 April and 9 May 2018.
Up until a few weeks ago, it had seemed nailed on that a rise in interest rates would be rubber stamped by the Bank's rate-setters when they met at the start of May. In recent weeks, however, an economic lull saw the near-certainty become a non-starter, with members of the Monetary Policy Committee eventually voting seven to two in favour of keeping rates at 0.50%. "Over this period, right under the noses of savers, some of the best deals on the market were pulled from sale or had their rate cut," said Rachel Springall, finance expert at moneyfacts.co.uk. "Providers themselves had priced in a rate rise and, not wanting to be forced to pay too much should they have to raise their own rates afterwards, they opted to cut their products instead."
The situation highlights how providers react to the possibility of a base rate change well in advance of the actual announcement being made. Indeed, a similar scenario played out in October last year, when several providers also made pre-emptive cuts to their rates in the month before the Bank of England did actually raise the base rate of interest by 0.25%. The difference this time is that the providers moved, while the Bank of England stood firm.
A steady flow of funds into some of the less familiar, but highly competitive, banking brands is also said to have played its part in rates slipping lower over the last few weeks, with Charter Savings Bank, Ikano Bank, Masthaven Bank Ltd, Secure Trust Bank, United Trust Bank and Wyelands Bank all cutting the rates on their one-year fixed bonds. On the flipside, Paragon Bank recently opened its easy access account to new customers, showing that they are keen to attract new money.
Offering some sage advice, Rachel concludes: "It may be prudent for savers to focus their attention on the top deals right now, and not resign themselves to waiting for a base rate rise to come along. This way, they can be in the right frame of mind to avoid missing out on the best rates available."