Interest rates on cash Isas and savings rates may start to reverse as inflation falls, savings guru Anna Bowes has warned.
According to Bowes, co-founder of SavingsChampion, while it is cause for celebration that inflation is, at last, starting to fall, there are signs that the rises in savings rates are "slowing and, in some cases, reversing".
She said even over the past two weeks up to January 20, there had been some "dynamic" moves in the easy access best buy tables.
Bowes said: "In fact, there was a brief spell of the top rate on offer paying more than 3 per cent, the highest rate we’ve seen so far. But as well as the top rate rising, there have also been other accounts entering the top five, bucking the trend of the slowdown in rate hikes.
"The first positive move came from Coventry Building Society. The mutual launched a new version of its Limited Access Saver (Online)(7) with a rate of 2.85 per cent, putting it just behind the leader at the time, Zopa’s Smart Saver which was, and still is, paying 2.86 per cent AER.
"But Zopa is no longer in the top spot though, as it was knocked off its perch by Cynergy Bank, which launched the latest issue of its Online Easy Access Account."
Issue 55 is paying 2.90 per cent AER, although this rate does include a small bonus of 0.15 per cent for the first 12 months.
An increase from the Tipton Building Society on its Limited Access (Issue 2) account, paying 2.9 per cent on a balance of less than £25,000 and 3.2 per cent for those with £25,000 to £100,000, lasted just a day - it was withdrawn from sale within 24 hours.
Less encouraging
In SavingsChampion's 2-year savings bond table, "things are even less encouraging", Bowes added. Firstly, Smart Save replaced its previous market leading rate paying 4.54 per cent with a new version paying 4.41 per cent.
Then, Loughborough Building Society and Ford Money who had been paying 4.5 per cent, withdrew their bonds on the same day.
As for fixed-rate Isas, the news was "even less palatable" for the three-year fixed-rate Isa. While the provider at the top is still UBL UK, the bank has dropped the rate it is offering from 4.25 per cent to 4.11 per cent.
Bowes added: "Hopefully if we see another base rate rise on 2nd February, this will inject a bit more competition between providers, which as we know is good news for savers."
But whether the bank will move to raise rates again in February is still under debate.
Most market commentators expect one or two further rate rises to keep pushing inflation down after it peaked at 11.1 per cent last year, marking a record high for more than 40 years.
But as FTAdviser investment editor David Thorpe wrote in his latest CPD feature, investors have been adjusting their expectations around the pace and timing of interest rate rises this year.
