6% savings accounts disappear

Saving accounts offering interest over six per cent are disappearing fast as banks and building societies cut their interest rates.

Following the Bank of England's decision to cut rates to three per cent, interest rates on 22 per cent of variable rate savings products have been cut

While mortgage lenders have been reluctant to cut savings rates by the full 1.5 per cent issued by the Bank of England this month, most bank and building societies cutting their rates have made the full cut.

Data from moneytfacts.co.uk show if all savings providers cut rates by 1.5 per cent, then based on accounts with £5,000, 12 per cent of the market would pay no interest, 27 per cent would pay one per cent and 52 per cent would pay two per cent or less.

Michelle Slade, analyst at Moneyfacts, said: “With mortgage lenders not passing the cut on in full, savers were hoping that they would get off lightly, but so far their optimism has been misplaced.

“At the start of the month, there was an abundance of accounts paying well over six per cent.

"These are now disappearing fast and will no doubt be gone by early next week as more cuts are announced."

She added it was now more important than ever that savers review the rate they are getting.

“Rates of over five per cent may still remain, but these will be few and far between," Ms Slade said.

However, she predicted the continuing crunch hitting interbank lending, banks and building societies will be cashing in on savers.

“With banks still remaining wary about lending to each other, their savings book will remain an important part of their strategy," she said.

“They will not want to drive their savers into the arms of their competitors, so hopefully we may see other providers restricting the cuts they make.”

Best buy saver accounts from banks that have already cut rates

Institution	Account name	Interest rate on £5,000
ICICI Bank UK	HiSAVE Savings	5.50%
Anglo Irish Bank	7 Day Notice Issue 2	5.40%
Anglo Irish Bank	Easy Access Deposit Issue 2	5.25%
Northern Rock	E-Saver	5.15%
Whiteaway Laidlaw Bank	60 Day Bonus	5.06%

Source: Moneyfacts.co.uk 25.11.08