Average variable savings rates sink to two-year low

Yet the number of savings accounts available rose to record heights.

In unfortunate news for savers, variable rates hit a two-year low, according to the latest Moneyfacts UK Savings Trends Treasury Report. Typical easy access returns were found to have dipped for the second consecutive month to 2.68% at the start of July, down from 2.71% a month ago, and were last lower back in July 2023 when average rates stood at 2.41%.

Meanwhile, average rates for notice accounts experienced similar cuts, dropping from 3.67% to 3.62% between June and July – also marking the lowest returns seen in the sector in two years when typical earnings were recorded at 3.43%.

“The downward momentum is an inevitable turn of events,” said Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, referencing the numerous cuts to the Bank of England Base Rate over the past year. The UK’s central interest rate has fallen four times since August 2024, before the most recent announcement in June saw it held at 4.25%. These cuts are often quickly passed on to variable returns which could explain the recent downturn.

And yet, according to Springall, around 90% of accounts continue to pay below this, despite “the behaviours of challenger banks, which are determined to draw in deposits to fund their future lending”. This in turn may have also influenced pricing.

The impact of rate bonuses

Indeed, to entice customers, many of these lesser known providers include an introductory bonus on their offerings which allows them to initially offer highly competitive, even market-leading returns.

At the time of writing, Chase sits at the top of our easy access chart with its aptly named Chase Saver With Boosted Rate which pays 5.00% AER inclusive of a considerable 2.17% 12-month bonus. Close behind, the Sidekick High Yield Cash Reserve 6 from fellow challenger bank Sidekick offers 4.51% AER, with this also including a 12-month bonus of 0.56%.

As Springall points out, “it’s been over a decade since there were as many bonus accounts of this kind”, with the average bonus rate having now risen to 1.20% – the joint highest on record.

However, these bonuses, while great for giving an upfront boost to your earnings, can quickly leave you high and dry after they expire due to lacklustre underlying rates. It’s therefore important to be ready to switch to a more competitive paying account when the time comes.

Fixed rates climb higher

Between keeping an eye out for expiring introductory bonuses and the worry of further cuts, many savers may seek the reassurance of guaranteed returns. Luckily, the fixed savings market appeared more resilient by comparison, and even saw average rates rise month-on-month.

Both one-year and longer-term bonds saw average rates rise by 0.02 and 0.01 percentage points to 4.03% and 3.91% respectively during this timeframe. Understandably, savers may not be overjoyed at such marginal increases given the uncertainty over interest rates, though it’s still a positive sign for the market to see these sectors rising for the first time since April 2025.

This also comes as top one-year returns were found to have made the biggest jump in almost a year to 4.55% in the month to the beginning of July, which has since edged higher thanks to an increase from yet another challenger bank; Castle Community Bank hiked the rate on the one-year variant of its Fixed Rate Savings, which as of 14 July, pays 4.59% AER.

Variable ISAs suffer harsher cuts

Cash ISAs witnessed even more severe month-on-month cuts to average variable returns – frustrating news for savers after a tax-free wrapper for their money. The typical rate for an easy access ISA for instance, slipped from 2.98% to 2.92%, an almost two-year low, while average notice ISAs dropped by 0.06 percentage points to 3.49%.

Mirroring its savings counterpart, however, the average one-year ISA observed a slight uptick from 3.94% to 3.95%, as longer-term ISAs held firm between June and July at 3.82%.

Record-breaking number of savings options

Nevertheless, savers now have the largest choice of accounts ever after product choice surged to a record high of 2,253 (including ISAs), giving them more opportunities to find a home for their hard-earned cash.

“Despite minor rate moves, providers were busy with product churning once more, as the average shelf-life of a fixed rate bond fell to 44 days, from 49 days, down from the three-year high of 66 days back in March 2025,” commented Springall.

As a result, savers may need to move quickly to take advantage of the latest rates and can compare all the accounts currently available over on our charts.