Britain a nation of ‘sunny savers’: Bank of England survey reveals more than one in five believe savings rates have gone UP since last year
- Just 33% of a survey of nearly 4,600 people correctly said rates had fallen
- 19% didn’t know and 27% felt rates on mortgages and savings had not changed
- This is despite savings rates falling to all-time lows over the last year
- The survey also suggested savers were increasingly optimistic about savings rates rising over the next year
We may be a year on from the deepest Bank of England base rate cuts on record, but only a third of Britons know that savings rates have fallen since then, and more than a fifth believe they have actually gone up.
Despite two cuts on 11 and 19 March which took the base rate to an all-time low of 0.1 per cent, the survey of around 4,600 people by the Bank of England found 22 per cent said rates on ‘mortgages, bank loans and savings’ had increased over the last 12 months.
The latest inflation attitudes survey, run in partnership with Kantar, was carried out in the first two weeks of February.
It found 19 per cent didn’t know, 27 per cent felt rates ‘stayed about the same’ and only a third correctly said rates had fallen.
The latest survey of nearly 4,600 people suggested British savers were far too optimistic about what had happened and would happen to savings rates
The findings suggested Britons became less aware of what had happened to savings rates the more time had passed since last March’s twin base rate cuts.
A bigger 38 per cent told the same survey last November interest rates had fallen over the previous 12 months and two in five last August.
It also comes at time as ‘accidental savings’ continues to tick up, with the Bank of England saying £150billion was tucked away by this cohort of people last year – and this figure could swell to £200billion by the summer.
James Blower, a savings industry analyst and founder of The Savings Guru, said he was ‘staggered’ by the findings.
Between last March and the start of this month savings rates have plummeted to all-time lows, while the number of available accounts has also fallen.
The rate on the best bread and butter easy-access account has fallen by three-fifths, from 1.31 per cent to 0.5 per cent.
And fixed-rate bond rates have also fallen plummeted. The best one-year rate available on 1 March 2020 was 1.6 per cent and the best two-year 1.7 per cent, and this has since fallen to 0.65 per cent and 0.85 per cent.
‘Best buy rates fell by a fifth between March and September and have more than halved since then’, James Blower told This is Money earlier this week when we looked at what had happened since the first base rate cut last year.
|Best buy rate in March 2020||Best buy rate in March 2021||% Change|
|One-year fixed-rate bond||1.6%||0.65%||-59%|
|Two-year fixed-rate bond||1.7%||0.85%||-50%|
|Source: The Savings Guru/Savings Champion/This is Money|
And with just a few weeks to go until the end of the tax year, there are few signs of an ‘Isa season’.
The best tax-free easy-access rate has fallen from 1.3 per cent last February to just 0.6 per cent now, a fall of 53 per cent despite the fact banks are supposed to be competing for savers’ money before they lose out on their £20,000 Isa allowance.
The Bank of England’s findings also suggest savers’ seeming optimism is not limited to the present.
The Bank of England base rate was cut to an all-time low last March and may not rebound until at least 2023
More than a third – or 35 per cent – of respondents said they believed rates would increase over the next 12 months, nudging up slightly from November.
The percentage who expected them to stay the same increased from 34 per cent to 35 per cent.
However, despite the success of the UK vaccine rollout and a lower-than-expected fall in GDP in January of 2.9 per cent, savings market watchers and economic forecasters do not seem to share that view.
The Bank of England base rate, which could help trigger an increase in savings rates, is not expected to rise to 0.25 per cent until 2023 according to forecasts from the Office for Budget Responsibility published alongside last week’s Budget and may not return to 0.5 per cent for another four years.
‘The drivers that are likely to move rates up are positive growth in the economy, base rate increases, an end to the pandemic and competition’, James Blower said earlier this week.
‘We all know the economic outlook isn’t strong at the moment and base rate is more likely to fall than rise.
‘This really only leaves competition to stimulate the market. There are new banks set to enter the savings market, but these won’t need large volumes of savers so are likely to stimulate rates but not push them up significantly.’