Banks are beginning to cut rates on the top regular-saver accounts, in a worrying move for consumers.
These deals encourage good savings habits by only paying the top interest rate if cash is put into the accounts every month.
Until last week the top rate of 5pc was paid by three banks – M&S Bank, HSBC and First Direct. However, the latter two have cut their rates to 2.75pc. Nationwide also paid a 5pc rate but ended this in April.
Now M&S Bank stands alone at 5pc, with the next-best rate being the 3pc offered from Virgin Money.
Rachel Springall, of financial experts Moneyfacts, said: “Generally this market doesn’t change. It just shows that most areas of the savings market are being attacked by rate cuts. If you are thinking of saving for next year you need to get your skates on as things are changing very, very quickly.”
Banks are withdrawing their most enticing deals for the same reasons – worries their own finances will be squeezed by coming economic troubles.
On lenders’ list of worries is a hard Brexit leading to a fall in the Bank of England Bank rate. The Bank’s Gertjan Vlieghe has said a hard Brexit on Oct 31, or further delays, would likely cause the rate to fall to almost zero.
A near-zero Bank of England rate would limit high-street banks' ability to make a profit on high-interest accounts.
The banks are also concerned profits could be hit by a global recession, and are therefore being less competitive with the interest they pay customers.
The Autumn is normally a good time of year for top regular saver rates, as lenders unveil their top deals.
This time of year is typically chosen because savers will have Christmas on their minds. Because the deals take many months to build up significant interest, banks target them at savers planning for the following year.