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| Version 3 | Version 4 |
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| Savings rates plunge further | Savings rates plunge further |
| (2 days later) | |
| Interest rates on the best-buy savings accounts have fallen by a half since the launch of the Funding for Lending scheme in August 2012, with Nationwide and West Bromwich building society among the institutions making cuts this week. | Interest rates on the best-buy savings accounts have fallen by a half since the launch of the Funding for Lending scheme in August 2012, with Nationwide and West Bromwich building society among the institutions making cuts this week. |
| The website Savings Champion, which tracks market-leading accounts, says the average rate on the top five easy access accounts has fallen from 3.25% last summer to just over 1.6% today. Nationwide's MySave Online Plus account was among the best buys before the society cut the rate by 0.3 percentage points on Monday. | The website Savings Champion, which tracks market-leading accounts, says the average rate on the top five easy access accounts has fallen from 3.25% last summer to just over 1.6% today. Nationwide's MySave Online Plus account was among the best buys before the society cut the rate by 0.3 percentage points on Monday. |
| Returns on fixed-rate bonds have also been slashed, with Savings Champion warning that anyone with a bond due to mature could be in for a shock. According to figures from the Bank of England, the average rate on a two-year bond has fallen from 3.2% last year to 1.9% by the end of May. | Returns on fixed-rate bonds have also been slashed, with Savings Champion warning that anyone with a bond due to mature could be in for a shock. According to figures from the Bank of England, the average rate on a two-year bond has fallen from 3.2% last year to 1.9% by the end of May. |
| Funding for Lending was launched by the government to offer banks and building societies access to low-cost funds, with the aim of encouraging them to lend more to homebuyers and businesses. But while mortgage customers are benefiting, savers are suffering as lenders no longer need to attract customers' money to back home loans. | Funding for Lending was launched by the government to offer banks and building societies access to low-cost funds, with the aim of encouraging them to lend more to homebuyers and businesses. But while mortgage customers are benefiting, savers are suffering as lenders no longer need to attract customers' money to back home loans. |
| New customers at Nationwide and its subsidiaries – the Cheshire, Derbyshire and Dunfermline building societies – are being offered lower rates, with up to 0.4 percentage points cut from fixed-rate bonds and some Isas restricted to those with maturing deals. The rate on Nationwide's MySave Online Plus account has been reduced to 1.69%, while the Flexclusive Isa has had its rate cut from 2.5% to 2.25%. | New customers at Nationwide and its subsidiaries – the Cheshire, Derbyshire and Dunfermline building societies – are being offered lower rates, with up to 0.4 percentage points cut from fixed-rate bonds and some Isas restricted to those with maturing deals. The rate on Nationwide's MySave Online Plus account has been reduced to 1.69%, while the Flexclusive Isa has had its rate cut from 2.5% to 2.25%. |
| While existing Nationwide savers will not be affected by the cuts, those at West Bromwich BS will be. The biggest reduction is for customers with the society's WeBSave Isa 6, who have seen the rate cut from 2.66% to 2%. | While existing Nationwide savers will not be affected by the cuts, those at West Bromwich BS will be. The biggest reduction is for customers with the society's WeBSave Isa 6, who have seen the rate cut from 2.66% to 2%. |
| Sue Hannums of Savings Champion says fixed rates have "plummeted". "Savers who took out a best-buy one-year rate this time last year will see rates drop from around 3.5% to 2% for current best-buy one-year bonds. | Sue Hannums of Savings Champion says fixed rates have "plummeted". "Savers who took out a best-buy one-year rate this time last year will see rates drop from around 3.5% to 2% for current best-buy one-year bonds. |
| "And things are worse for those savers who locked in for the longer term. Savers who opted for a five-year fix five years ago at rates of up to 7% now can't even achieve levels of 3%." | "And things are worse for those savers who locked in for the longer term. Savers who opted for a five-year fix five years ago at rates of up to 7% now can't even achieve levels of 3%." |
| Meanwhile, research by accountancy firm UHY Hacker Young suggests UK savers are losing £17bn a year as a result of low interest rates and higher than target inflation, and that the extension of Funding for Lending until January 2015 will continue to hit returns. It estimates that £114bn is currently held in accounts yielding 0% interest. | Meanwhile, research by accountancy firm UHY Hacker Young suggests UK savers are losing £17bn a year as a result of low interest rates and higher than target inflation, and that the extension of Funding for Lending until January 2015 will continue to hit returns. It estimates that £114bn is currently held in accounts yielding 0% interest. |
| Top savings accounts | Top savings accounts |
| Britannia | Britannia |
| Yorkshire BS | Yorkshire BS |
| ICICI Bank UK | |
| Powered by MoneySupermarket for the Guardian | Powered by MoneySupermarket for the Guardian |