While interest rates fall to a two-year low, the number of savings deals reaches a record high

More options are now available to savers when it comes to cash ISAs and savings accounts

However, the available interest rates are still declining. What does the savings market's future hold?

The most recent data from comparison website Moneyfacts shows that the number of savings products and providers has increased to an all-time high.

The number of savings accounts available has increased from 1,420 to 1,596 in the past year. At the same time, there are now 639 cash ISAs, up slightly from 553 in June 2024.

Additionally, Savers can choose from the most providers. The number of savings providers has increased to 153, another record high, from 152 last month.

Moneyfacts' finance expert Rachel Springall says: "The number of providers and total selection of offers has increased to an all-time high, which may reassure savers. A major contributing factor in recent years has been the steady ascent of challenger banks, and the range of accounts available on the market can be helpful for clients with different needs.

Savers, however, are dealing with declining returns on their investments at the same time. Variable rates have dropped to their lowest points in nearly two years, while average savings rates have decreased month over month.

Specifically, the average easy-access ISA has fallen to 2.98 percent, its lowest since August 2023, and the average easy-access savings rate is now 2.71 percent, its lowest since July 2023.

Right now, the average rate on a one-year fixed bond is 4 points, the lowest since May 2023.

We examine the current state of the savings market.

The range of savings rates is wide.

Cash ISAs and savings account interest rates have recently been declining.

For instance, a year ago, the average cash ISA for one year was paying 4 percent. Its rate has dropped below 4 percent, specifically 3 point 94 percent, after paying 4 point 02 percent last month.

The situation with easy-access savings accounts is comparable. Three percent was the average rate a year ago. The average stood at 2.78 percent a month ago. The current rate is 2point 71 percent.

The decline in savings rates is primarily due to a series of base rate reductions by the Bank of England. At the moment, the bank rate is 4.25 percent. It was at 5:25 percent a year ago.

What prospects does the savings market have?

Springall claims that any additional base rate reductions could "dampen growth in product choice and new rivals" and lead to additional reductions in the savings rate.

On Thursday, June 19, the Bank of England will convene once more to determine whether to alter the base rate.

Savers may therefore need to prepare for additional cuts to their cash ISAs and savings accounts, as well as a possible reduction in the selection of savings options, if the base rate is lowered this year, as is generally anticipated.

"Swift rate movements have been monitored to gauge future rate expectations," according to Springall, "but they must balance cuts or rises against their deposit funding targets."

It is not always the case that a savings provider will lower its rates in response to another base rate cut.

In contrast to the norm, some providersparticularly challenger bankslike to introduce market-leading offers or raise the rate on an existing account. This could be done to attract new clients and/or meet their financial goals.

Chase launched a bonus offer last week that allows new customers to save up to 5% for a year.

Customers of banks and building societies may also want to keep an eye out for other ways to increase their income, like banking with Nationwide and earning its 100 Fairer Share payment, or moving providers and earning a generous switching bonus (up to 310 at the moment).

The market for cash ISAs has seen savers pouring record-breaking sums of money into them.

"With the most recent data from the Bank of England showing a record monthly high of deposits of about 14 billion during April, it is clear that cash ISAs are highly sought after," says Springall.

"The significant deposits would have been largely influenced by the clamor surrounding cash ISA reforms and the rush of savers seeking to shield their hard-earned money from taxes. With millions of people anticipated to pay higher-rate tax at 40% this tax year, cash ISAs are predicted to remain popular.