THE typical proportion of income saved by households has halved over the last 40 years, according to research.

Lloyds Bank found that households saved around 9.9 per cent of their income between 1974 to 1984, against a backdrop of rising interest rates which reached double digits for the first time in 1979.

But after five years of the Bank of England base rate sitting at its historic low of 0.5 per cent, households are now saving around 4.8 per cent of their incomes.

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Savings peaked in 1980, when households were putting 12.3 per cent of their income away, but the savings ratio fell rapidly after 2000, fuelled by rising consumer spending and borrowing.

Lloyds said low interest rates helped cut "the perceived need for households to hold precautionary savings". The average savings ratio fell to a low point of 2.2 per cent in 2008, before heading back up.

The savings ratio is based on the total income that is not spent by households, when can be saved in banks or in pensions and shares.

Lloyds took its figures from Office for National Statistics (ONS) and Bank of England data.

It also found the typical value of savings per household including cash deposits and pensions had increased five-fold over the last 40 years to reach £126,278.

In 1974, cash deposits accounted for 53 per cent of households' total savings, but by 2014 this proportion was 38 per cent, as the share of pensions as a proportion of total savings has grown in the last 40 years.

The study was released after it emerged two members of the Bank of England's monetary policy committee voted for a 0.25 per cent hike in interest rates, in the first split vote seen on rates since 2011, fuelling speculation over a rise in interest rates.

Andy Bickers of Lloyds Bank, said: "The proportion of income saved by households has halved, with less being held in cash savings than in the past.

"Getting into the savings habit early will help the younger generations to have a more secure financial future."