UK investors currently believe that savings rates are still not high enough to tempt them to move more money into cash.

A new study from GraniteShares found that just 35% said they have put more of their investments into cash accounts since the Bank of England (BoE) started hiking the base rate in December last year.

Five successive rate increases have taken the Bank’s base rate from 0.1% to the current 1.25%, with further increases expected.

The GraniteShares research, based on a study among 1,152 adults, revealed that just 4% said they have put a lot more into cash, 31% have put a little more into cash in comparison with shares, while 65% say rates are still too low.

GraniteShares stated that of the main reasons for this is that after inflation, interest rates in cash accounts are still firmly in negative territory. The BoE recently predicted UK inflation will hit 11% this year.

Most regular investors are using money in cash accounts to fund share trading – with three in five (61%) who have bought in the past year saying they have used money in cash accounts to do so. Almost half (47%) also said they have paid for shares from their salary, while 5% have switched from cryptocurrency.

Founder and CEO at GraniteShares, Will Rhind, commented: “The savings market is moving very quickly with some providers raising rates regularly to tempt customers to switch accounts, but it is not having much effect on regular investors.

“Most are sticking with the potential for better returns on their money from stocks and the overwhelming reason for the popularity of share trading remains the negative returns after inflation available from cash accounts.

“Share trading has become mainstream during the COVID-19 pandemic and that is reflected in the demand for products such as short and long ETPs which provide the flexibility needed to help navigate volatile market swings on both the long and short sides.”

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