Savers are being advised to lock in before they drop further
Rates for savers looking to put their money away for up to a year have now fallen below 1% for the first time in three years.
The average rate on one-year fixed bonds is now 0.99%, the lowest since May 2017, when it was 0.98%.
This means that since March the average one-year fixed bond rate has fallen by 0.16% percentage points.
Cash Isa savers have been hit even harder, with one-year Isa rates falling to 0.91%, a level not seen since June 2017.
Moneyfacts says that the current number of savings products for sale overall is the lowest since February 2017.
The total number of savings accounts, including Isas, now stands at 1,548, down from 1,768 in March 2020.
Rachel Springall, personal finance expert at Moneyfacts, says: “As we had seen last month, savings providers pulled the most deals on a month-on-month basis since our electronic records began in 2007 and while the number of products to disappear month-on-month between April and May is less, deals are still disappearing.
“Those savers who are about to come to the end of their fixed bond may wish to prepare themselves for a shock, as they will find the top rates have dropped substantially over the years."
Why are rates falling?
On 19 March, the Bank of England cut the base rate for the second time in nine days to a record low of 0.1%.
This was done to help support the economy amid concerns about the coronavirus pandemic.
When this happens banks usually pass the base rate cuts to their saving deals in full.
While fixed-term savings deals initially remained competitive, savers are now beginning to feel the impact of the base rate cut.
Also, the coronavirus lockdown means many households are spending less and are looking for somewhere to save their cash.
As a result, many smaller providers are unable to cope with the increased demand and have had to withdraw products from the savings market.
Springall says: “Providers are perhaps cutting rates to deter deposits due to demand or find they are much higher up the rate tables than they can cope with."
Best one-year fixed rate
The best one-year fixed bond rate currently on offer is from Raisin at 1.43%. You can open this account online with a deposit of £1,000.