Savings accounts 'have rates cut'

A tenth of savings accounts have had their interest rates cut during the past six months despite the Bank of England base rate being kept on hold, research has shown.

Around 10% of variable rate savings accounts are now paying lower rates than they were in May, according to financial information group Moneyfacts.co.uk.

It said interest rates had been increased on only 3.5% of variable accounts during the same period, despite providers battling to get savers' money to fund their mortgage lending.

During the past month alone, savings providers have cut the returns paid on 4% of all variable rate accounts, slashing them by up to 0.86%.

The reductions mean 49% of all variable rate savings accounts are now paying interest of just 0.5% or less, with nearly a quarter offering returns of 0.1% or below.

Savers have been hit hard by the steep falls in interest rates seen during the past 12 months.

Recent figures from the Bank of England showed that the average rate paid on a branch-based instant access account is now just 0.17%, while notice accounts are offering average returns of 0.39%.

Michelle Slade, spokeswoman at Moneyfacts.co.uk, said: "Savers are already experiencing some of the lowest rates ever and this will be another bitter blow to take.