There is a growing indication that some of the UK’s leading savings providers may be about to cut their interest rates to zero.
The chaos at Westminster, the uncertainty of Brexit and a general slowdown in the global economy has seen several of Britain’s biggest banks and building societies cut their rates in recent months.
However, the decision by state-backed National Savings and Investments (NS&I) to scrap several of its most popular products and slash interest rates for its most loyal customers has led many experts to suspect that providers could be heading towards zero rates of interest.
NS&I is not alone in reducing its rates, with Lloyds Bank already planning to drop its Instant Cash Isa rate from 0.35 per cent to 0.2 per cent.
Marcus by Goldman Sachs, a popular online banking brand seems to be following suit by reducing the rate on its market-leading “easy access” account from 1.5 per cent to 1.45 per cent.
Many banks seem to be taking a cautious approach in the run-up to a potential no-deal Brexit and they will have been listening to the Bank of England which has warned about the prospect of a Brexit recession and proposed a cut to interest rates this year by up to 0.5 per cent.
The actions by the banks are backed up by the latest data from Moneyfacts, which shows that average fixed savings rates have been falling steadily, with the average rate on a one-year fixed-rate bond falling from 1.44 per cent at the start of July to 1.35 per cent by the end of September.
Andrew Hagger at the financial website, MoneyComms said that some providers would have to drop to or near to a zero rate adding “It’s not looking good for savers at the moment.”