Rates improve as savings market springs back into life

Activity in the savings market has soared in recent months with the number of providers reaching its highest point in more than seven years, new figures reveal.

The latest Moneyfacts UK Savings Trends Treasury Report shows that there are now 120 savings providers – such as banks and building societies – in the market, up five per cent compared to the previous year.

Activity in the market significantly dropped off after the financial crash, from a peak of 126 providers in August 2008 to an industry low of 107 in July 2013.

However, the new report indicates that the market is recovering at a steady pace and is well on its way to returning to pre-crash heights.

A higher volume of providers generally indicates increased competition and better deals for consumers as a result, as well as reflecting positively on the wider economy.

Charlotte Nelson, of Moneyfacts, said: “The fact that the number of providers is back to the high last seen in 2010 suggests that the savings market is showing signs of recovery.”

The figures also show that increased activity and the threat from new “challenger banks” have forced interest account rates to rise to around 1.25 per cent.

However, they still stand in the shadow of 2010’s highest paying account offering an “impressive” 2.80 per cent.

Ms Nelson added: “These new banks launching into the savings market, often referred to as challenger banks, have shaken up the market and provided a small haven for savers looking for a decent return on their savings.”

LINK: Savings market sees boost in new providers