New data has revealed a significant downturn for British savers, with the average savings rate across the UK plunging to its lowest level in over a year and a half.
A Market-Wide Downturn
According to the latest figures from financial information provider Moneyfacts, the Moneyfacts Average Savings Rate fell from 3.40% to 3.35% in January 2026. This marks the lowest point for this benchmark rate since May 2023, when it stood at 3.20%. Over the past twelve months, the average rate has dropped from 3.64%.
The decline has been felt across almost every type of savings product. The average easy access ISA rate dropped to 2.69% in January, while the average notice ISA rate fell for a third month in a row, recording its biggest single-month drop since September to reach 3.34%.
Fixed Rates Also in Decline
For those seeking more certainty, the news was no better. The average one-year fixed ISA rate fell to 3.79%, its lowest level since April 2023. Similarly, the longer-term fixed ISA average dropped to 3.75%, a level last seen in March 2023.
Outside of ISAs, standard savings accounts followed the same trend. The average easy access rate fell for the first time since October to 2.48%, its lowest since July 2023. Notice accounts and fixed-rate bonds also saw substantial declines, with the average one-year fixed rate falling to 3.85%.
Expert Analysis and Future Outlook
Caitlyn Eastell, a Personal Finance Analyst at Moneyfacts, commented on the shift, stating: “A new era in the savings market may be taking shape this year, as savings rates are anticipated to fade from the peaks caused by the market volatility seen over the past three years.”
She attributed the immediate falls to the impact of December’s base rate reduction by the Bank of England, noting it was the first time in over six months that all average rates had fallen simultaneously. Eastell pointed out that while the number of accounts paying above the base rate saw a record rise to 877, this still means over 60% of accounts do not match the base rate.
Looking ahead, the analyst suggested interest rates are expected to settle around 3.25%-3.50%, levels last seen in December 2022. “Together, this signals that current savings rates may not last and there’s still plenty of headroom for rates to fall,” Eastell warned.
Some financial advisers have suggested the falling rates could have a silver lining, as they may raise savers' awareness of the limitations of cash products and encourage them to seek better returns or consider other forms of investment to build long-term financial security.
