Around two thirds (60%) of UK savings accounts fail to beat the Bank of England Base Rate of 3.75%, according to Moneyfacts figures.
The analysis shows that rates have been on a downward trend over recent months.
The average savings rate recorded by Moneyfacts has fallen over the past 12 months. The rate was last above 4% in January 2024, when it stood at 4.04%.
Things could could worsen for savers, the site warned, if inflation spikes due to prolonged unrest in the Middle East, leaving interest losing money in real terms.
Year-on-year average rates across easy access and notice accounts have fallen, easy access rests below 3%. The average notice account and notice ISA rates are sub-4%.
Fixed rates have been on the downward trend over the past 12 months, Moneyfacts said, with one- and five-year fixed bond and ISA rates sitting below 4% on average.
However the ISA season has breathed some life into the market, as the average one and five-year fixed ISA rates are up since the start of March.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Holding the Bank of England Base Rate has given savers a short respite, as providers could hold their ground until the future expectations of interest rates become clearer.
“Over the past couple of weeks, there have been more savings rate increases than reductions, most notably on one-year fixed rates, but the true benefit rests in the margins, so average rates are not moving much.”
She said the market needs stability and savers need to feel encouraged to build a nest egg.
She said: “As caution over the future of interest rates continues, this could lead to fewer cuts to savings rates over the shorter-term, particularly fixed rate bonds or ISAs, as these take into consideration swap rate volatility.”