Savings rates hit two-year low despite record product choice

In June 2025, the UK experienced a notable increase in the number of available savings deals, reaching a historic total of 2,235, as reported by financial information website Moneyfacts. This surge in product offerings comes as the number of savings providers also saw an uptick, rising to 153. Not only did the availability of cash ISAs reach a record high of 639, but the overall surge points to a competitive market atmosphere fueled partly by the presence of challenger banks. This sharp increase in choices comes as the Bank of England approaches its upcoming Monetary Policy Committee meeting, but amidst this abundance, many savers are facing reduced rates, reflecting a downward trend despite heightened options. The latest figures, tracked by Moneyfacts, indicate that while savers have more choices than ever, they are simultaneously seeing a decrease in the rates offered on popular savings products. For example, the average easy access savings rate has dropped to 2.71%, the lowest level since July 2023, and the average notice account rate also reached a low of 3.67%. With other rates, like the typical easy access ISA and one-year fixed bond rates witnessing significant declines, many industry experts are voicing concerns about the potential dampening effect of recent cuts to the Bank of England's base rate, which stands at 4.25% following earlier reductions. Increased living costs are further eroding the real returns for savers, as inflation rates remain a pressing concern. As the Bank of England prepares to convene, economists largely expect that rates will remain unchanged. This outlook comes at a time when rising living expenses are significantly impacting financial decisions for many individuals, particularly those who rely on savings. Rachel Springall, a finance expert at Moneyfacts, indicated that a notable increase in challenger banks has been a driving force behind the broader array of savings products available. However, she cautions that the downward adjustments to rates may limit future growth in product choice and the emergence of new market players. Ultimately, though the options for savers have expanded markedly, the simultaneous drop in interest rates may lead to fewer attractive returns, putting pressure on consumers as they navigate their savings strategies. Continuing uncertainties around inflation and interest rates will likely necessitate careful consideration by both savers and financial institutions in the coming months.