Savings accounts in 'fire of rate cuts' as average interest falls below 0.5%

A "fire of rate cuts" has spread across the savings market, with the average easy access account on offer now paying less than 0.5% in interest for the first time, according to a website.

Moneyfacts.co.uk said the Bank of England's recent decision to cut the base rate to 0.25% has "fuelled the fire of rate cuts across the savings market", sending savings rates to new record lows.

It said the average easy access rate on offer is now just 0.49%, down from 0.54% on August 1.

The average cash Isa rate on the market pays 0.99%, falling from 1.13% on August 1, while a typical one-year fixed bond pays 1.02%, down from 1.14% on August 1.

Moneyfacts said there were a "devastating" 354 savings rate cuts in August - compared with just three rises. This means there were more than 100 savings rate cuts for every rate that has increased. And 53 of the cuts were for more than 0.25%.

Rachel Springall, a finance expert at Moneyfacts.co.uk, said 20 "best buy" savings deals had been withdrawn altogether in August.

She said: "Despite an onslaught of cuts being made during August, savers would be wise to brace themselves for more cuts to come, particularly to best buy deals where providers may struggle to cope with demand.

"It's clear to see that savers have been left devastated by persistent rate cuts across the market and will struggle to find decent returns for their cash in the immediate future."