1,128 savings rate cuts so far this year - and just 127 increases, experts say

Savers' bad fortune continued as 13 "best buy" savings deals were withdrawn from market


Savers have suffered more than 1,000 rate cuts during 2016 alone - and the top-paying deals are being "slaughtered" as providers prepare for a possible base rate fall, according to a website.

This year so far, there have been 1,128 savings rate cuts across the market and just 127 rate increases, according to Moneyfacts.co.uk.

That equates to around nine savings rates being chopped for every rate that has increased since the start of 2016.

Savers' bad fortune has continued as 13 "best buy" savings deals were withdrawn entirely from the market in July.

Some of the best deals only sat on the shelf for a week before being closed to new customers - in what Moneyfacts said is a clear sign that providers cannot cope with the rush of savers desperately looking for a decent home for their cash.

Rachel Springall, a finance expert at Moneyfacts, said: "Providers are resorting to pulling the deals out of the market altogether.

"Decent savings deals are facing slaughter: repetitive cuts are just not practical for all providers to continue, so the only option left to limit the amount of cash coming in is to withdraw the best deals entirely and not replace them.

"Small providers that would have never envisaged being market-leaders are slowly finding themselves near the top of the market, due to other providers falling out of the best buys. This has resulted in a vicious cycle of rate reductions so that they can move to a more mid-market position, or indeed withdrawing the deal entirely due to countless applicants."

The average one-year fixed Isa rate on the market has fallen by 0.05 percentage points over the last month. In August, the average rate on offer for this type of deal was 1.09%, down from 1.14% at the start of July, Moneyfacts said.

A year ago, the average rate on a one-year fixed Isa was 1.44%.

While the future continues to look bleak for savers, some mortgage holders could see their costs edge down further in the event of a further snip to the base rate.

According to calculations from the Council of Mortgage Lenders (CML), a quarter point fall in the Bank of England base rate, if passed on fully to someone's mortgage costs, could shave around £26 a month off their mortgage payments, assuming they were on a 25-year repayment term and had borrowed £200,000.

Someone who has borrowed £100,000 over 25 years may see around £13 a month knocked off their repayment costs.

The extent to which borrowers can expect to see a change in their mortgage costs depends on whether their deal is directly tied to the base rate.

Some variable rate deals specifically track the bank rate. But others do not - and for these deals changes in the variable rate would be up to the individual lender, as the bank rate is just one of the factors lenders take into account when setting mortgage rates.

The CML's estimates suggest over 1.5 million existing mortgages are bank rate trackers. In general, the rates on these deals track the movements of the base rate, plus a certain percentage margin specified by the lender.

Around nine in 10 new mortgages being currently taken out are fixed rate deals, which give borrowers a guaranteed rate for a certain period, such as two, five or even 10 years - so the immediate effects of a base rate change will not be felt with these deals.

Those with a mortgage have £116,000 outstanding on average, with a typical borrower repaying around £542 per month.

Several mortgage price wars have already pushed many of the fixed rates on offer to record lows - and many home owners have never known anything other than rock bottom mortgage rates.

According to industry estimates, more than two million home buyers with a mortgage are likely to have never seen a bank rate rise, having climbed on to the property ladder while rates were generally static or falling.

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