Savers flocked to fixed savings accounts in the weeks before interest rates peaked, as savings deals on offer reached a record high.
New Bank of England data showed average fixed savings deals reached a record high of 5.27% in October, with the average easy-access rate also hitting a fresh high of 1.99%.
A total of £4.6 billion of savers’ money was put into banks and building societies during the month of October, with the bulk going to fixed rate accounts.
Laura Suter, head of personal finance at AJ Bell, said: “Savings rates hit another record high in October, representing the peak before the subsequent fall in rates. Savvy savers who saw the writing on the wall rushed to fixed rate accounts in October to lock in those deals before they disappeared.”
On 1 November, the Bank of England’s Monetary Policy Committee voted 6-3 to maintain the interest rate at 5.25%. The decision prompted some banks and building societies to lower their rates on fixed accounts.
The savings data also found that the trend of pulling money from easy-access accounts to funnel into fixed-rate accounts appears to have stopped. Following 12 consecutive months of outflows, with October recording zero net flows in the accounts.
Suter said the figures show that people are continuing to save, despite the cost-of-living crisis.
“We’re a far cry from the deposit levels seen in the pandemic, where at its monthly peak the nation was collectively saving £26 billion. But the fact that £4.6 billion of money was put into savings accounts at the sharp end of a cost of living crisis, with stealth taxes eating into people’s take home pay, and inflation pushing up prices, shows the resilience of some households,” said Suter.
“On the flipside, debt levels are rising. The annual growth rate for consumer credit hit the highest rate in five years, while another £1.3 billion was added to the nation’s debt pile in October. This comes at the same time as credit card interest rates rose again, to hit 21.05%. We’re seeing a split nation, with those struggling having to resort to debt while other households have far more resilience and can keep saving.”
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