Savings balances reach record high but fixed rate continues to dip

UK saving balances have reached record highs, despite the fixed rate market share continuing to shrink, CACI data analysed by Paragon Bank has revealed.

Total savings stock recorded on CACI’s database, which captures savings data from more than 30 leading providers, has grown by 8.3% since the pandemic started in March 2020, climbing from £903bn to £978bn.

This has been reflected in the average savings balance, which stands at £12,145 – an increase of over £1,000 since March 2020 where it stood at £11,141.

Easy access non-ISA balances have been a key driver of this growth – they now stand at £593bn, accounting for an enormous 60.6% of the entire savings market. This represents an increase from 17.4% since March 2020. The average easy access balance now has a value of £11,696, a growth of £1,450 since March 2020 where it stood at £10,246.
 
Another category to experience growth throughout the pandemic was the regular saver non-ISA category, which increased its market share from £11.8bn to £16.3bn.
 
Instant access ISAs remained steady since the pandemic began, seeing growth from £176.3bn to £186.9bn. The growth of the savings market outpaced instant access cash ISAs, which meant the category lost market share – dipping from 19.5% to 19.1%.

The fixed term market has continued to see its value reduce throughout the pandemic. Fixed term non-ISAs stand at a value of £73.1bn, down from £92.7bn at the start of the pandemic, a reduction of 21%.

Although the market share has reduced from 10.3% to 7.5%, the fixed term average non-ISA balance has increased throughout the pandemic, from £25,266 to £25,872. This is an indication that fewer savers are choosing to invest in fixed term bonds, but those that are, are investing similar or higher amounts. 

Total market statistics for term deposits, a measure from the Bank of England, back up this trend – depicting a 12.5% reduction from March 2020 to August 2021.
 
Fixed term ISAs followed a similar pattern, standing at £78.6bn in July 2021, down from £87.4bn in March 2020 – a decrease of 10%.
 
Derek Sprawling, savings director at Paragon Bank, said: “We are seeing the savings market continue to follow a pattern of growth, although there is a stark difference in performance between easy access and the fixed rate market.
 
“The easy access, non-ISA category has been the largest driver of growth within savings and now accounts for more than 60% of total savings stock registered through the CACI database – a massive segment.  That’s not including any savings sitting in current accounts.
 
“Our tip for savers would be to not overlook fixed rates, especially now that providers are building in the expectation of an increased base rate. The market is forward looking and rates available in the best-buy tables are no longer reflective of the base rate. It’s important for savers to make the most of competitive rates while they are available as it’s possible the market will remain volatile in the upcoming months.”

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