Caitlyn Eastell, Personal Finance Analyst at Moneyfacts, said:
“While volatile swap rates have been causing mayhem for borrowers, savings rates are telling a more positive story. Average non-ISA fixed rates have been rising consistently for over six months, and this is the longest sustained period of increases since 2023 for one-year fixed and 2022 for longer-term deals. Even the top rates have seen generous rises and across all terms, fixed rates are now paying above 5% for the first time since December 2023. For savers, this gives a welcome opportunity to secure some of the most competitive guaranteed returns in years.
“This could make a meaningful difference to savers whose money is currently sitting in lower-paying accounts or those whose existing fixed bonds are coming up to maturity. Someone with £10,000 to invest over a year could find themselves around £215 better off in the top one-year paying 5.15% compared to an account paying 3%. However, the very nature of fixed bonds means savers must lock away their money for the full term, so if they secure a deal now there is a risk that they could miss out on even more attractive returns should rates continue to rise.
“Savers looking for a tax-efficient home for their cash have more choice than ever, with the number of cash ISA products reaching a record high and, with the boosted competition, average ISA rates have risen across the board, including variable rates which saw their first increase since May. Typically, ISAs pay out slightly lower returns compared to their counterparts, however, some of the most attractive fixed ISAs now also pay over 5%, meaning savers don’t have to compromise on their tax-free savings. During August £4.4 billion flowed into ISAs, suggesting they are still popular among savers, particularly ahead of the cash ISA changes in April, but providers may work even harder to attract savers’ deposits as the deadline looms.”
Caitlyn Eastell, Personal Finance Analyst at Moneyfacts, said:
“While volatile swap rates have been causing mayhem for borrowers, savings rates are telling a more positive story. Average non-ISA fixed rates have been rising consistently for over six months, and this is the longest sustained period of increases since 2023 for one-year fixed and 2022 for longer-term deals. Even the top rates have seen generous rises and across all terms, fixed rates are now paying above 5% for the first time since December 2023. For savers, this gives a welcome opportunity to secure some of the most competitive guaranteed returns in years.
“This could make a meaningful difference to savers whose money is currently sitting in lower-paying accounts or those whose existing fixed bonds are coming up to maturity. Someone with £10,000 to invest over a year could find themselves around £215 better off in the top one-year paying 5.15% compared to an account paying 3%. However, the very nature of fixed bonds means savers must lock away their money for the full term, so if they secure a deal now there is a risk that they could miss out on even more attractive returns should rates continue to rise.
“Savers looking for a tax-efficient home for their cash have more choice than ever, with the number of cash ISA products reaching a record high and, with the boosted competition, average ISA rates have risen across the board, including variable rates which saw their first increase since May. Typically, ISAs pay out slightly lower returns compared to their counterparts, however, some of the most attractive fixed ISAs now also pay over 5%, meaning savers don’t have to compromise on their tax-free savings. During August £4.4 billion flowed into ISAs, suggesting they are still popular among savers, particularly ahead of the cash ISA changes in April, but providers may work even harder to attract savers’ deposits as the deadline looms.”
