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Savings market value spikes back up after slump as easy access category breaks record highs

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CACI data analysed by Paragon Bank[1] showed that the saving market spiked to a record £986 billion in October 2021 following a static period during Summer and early Autumn, with the average savings balance now standing at £12,431.

The latest data recorded on CACI’s database, which captures savings data from more than 30 leading providers, showed a small dip in the value of the savings market in September. However, October saw the market return to its pattern of growth, with an £7.4 billion increase in value month-on-month and a 3.7% increase year-on-year.

This October increase comes after savings balances remained static between July and September at around £978 billion, reflecting the impact of lockdown lifting on households’ saving and spending habits.

Total savings recorded by CACI has grown by 9.1% since the pandemic began, climbing from £903 billion in March 2020 to the latest figure of £986 billion.

Easy access driving upwards trend 

The most notable spike in value was across the easy access non-ISA product category, which increased by £10 billion between September and October alone, outpacing the total savings category growth by £2 billion.

This steep upwards trend has driven the growth of the overall savings market over the course of the pandemic, with the easy access category growing by 20.2% between March 2020 and October 2021, from £505 billion to £607 billion. This category now accounts for the lion’s share of the total savings market – 62% of CACI’s savings database.

This trend has also translated to higher average balances – the average non-ISA easy access balance grew from £10,246 in March 2020 to £12,106 in October 2021.

This has led to visible growth in accounts in higher balance bands, while lower balances have lost market share. The number of easy access, non-ISA accounts with balances of £100,000 or more now account for a record 2% of the total category. This is up from 1.8% in October 2020 and 1.60% in October 2019. Over the course of the last year, the number accounts with balances of up to £10,000 have been losing market share those with balances in excess of £10,000 have grown in number.

However, a vast proportion of those balances continue to earn a very low interest rate. Despite the growth of the easy access category and a gradual uptick in rates since early summer, 71% of easy access balances continue to earn a rate of 0.1% or less – less than seven times the best rates available in the best-buy tables. This figure has been fairly consistent throughout the year, dropping from 72% in August.

Derek Sprawling, Savings Director at Paragon Bank, commented on the data:

“CACI’s member banks saw the savings market’s growth remain flat throughout Summer and early Autumn. Although the easy access category continued to grow at a steady pace throughout this period, the reduction of other categories such as fixed rate products balanced that out to create a static market.

“The dominant trend that we are noting in the easy access space is that seven out of ten savers continue to receive a really low return on their money. This is despite rates picking up across the board and best-buy deals currently offering people the opportunity to earn at least six times more interest than they currently are in a low-paying account. Savers in low paying accounts are missing out on considerable interest so it’s important for people to look for the best deal.”

For further information contact:

Michael Clarke
Head of Media Relations
Paragon Bank
Tel: 07740090746

Notes to editors:

1. CACI produce an analysis of deposit stock from the main deposit banks providing data from more than 30 providers, based on individual cash savings. It allows us to focus on savings accounts, by combining all account types and both ISAs and non-ISAs. Unless stated otherwise, all data in this release is sourced from: CACI’s Current Account & Savings Database, as of end of October  2021  

Paragon Bank PLC a subsidiary of the Paragon Banking Group PLC which is a FTSE 250 company based in Solihull in the West Midlands. Established in 1985, Paragon Banking Group PLC has over £13 billion of assets under management and manages over 450,000 customer accounts.

Paragon Bank PLC is authorised and regulated by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands, B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551.

 

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551