Average savings rates have reached a 13-year low after rates fell for the fifth consecutive month, according to data from Moneyfacts.
Figures from the data provider showed average savings rates for easy access, notice accounts and their Isa equivalents, as well as one-year fixed Isas, have halved since March.
Average savings rates for one-year fixed bonds, longer-term fixed bonds and longer-term fixed Isas have also fallen by at least a third since the coronavirus took hold in the UK.
Returns have been impacted by the virus and subsequent base rate cuts to a record low of 0.1 per cent in March.
Rachel Springall, finance expert at Moneyfacts, said the data was bad news for consumers who may be looking to put aside some cash for emergency funds in response to the news last week that the UK has entered a recession for the first time in 11 years.
She said: “Since the UK lockdown, savings rates have plummeted to record lows across the board, so prospective savers may be disheartened with the current rates on offer.
“As more cash could flood the savings market, providers will need to act quickly to cope with demand and they could pull offers entirely if subscription levels fill too quickly, but this could well lead to a domino effect of other providers following suit.
“Savers who may wish to put away any disposable income amassed during lockdown will need to act quickly or be left disappointed.”
However, she said the number of available savings products had increased for the first time since November 2019.
Ms Springall said the top rate deal for easy access accounts currently available was offered by NS&I, which is looking to draw in funds to meet government targets.
Last month HM Treasury confirmed that NS&I’s net financing target for 2020-21 had been revised, from £6bn to £35bn, to reflect government finance requirements arising from the coronavirus.
Average easy access rate
Average easy access ISA rate
Average notice rate
Average notice ISA rate
Average one-year fixed rate bond
Average longer-term fixed rate bond*
Average one-year fixed rate ISA
Average longer-term fixed rate ISA*
*Longer-term fixed bonds or ISAs are those with terms over 550 days. Average interest rates based on a £5,000 deposit as at the start of the month. Source: Moneyfacts Treasury Reports