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One-year fixed bonds outshine longer-term offers

Image of a Moneyfacts Savings Treasury Report Image of a Moneyfacts Savings Treasury Report Image of a Moneyfacts Savings Treasury Report
Rachel Springall, Press Officer
Rachel Springall, Press Officer / Finance Expert T: 01603 476210 E: Email Rachel
19/02/2024

One-year fixed bonds outshine longer-term offers

One-year fixed bonds outshine longer-term offers

Moneyfacts UK Savings Trends Treasury Report data shows the average one-year fixed bond pays 0.50% more than the longer-term rate, with both rates seeing notable cuts month-on-month.

 

Moneyfacts UK Savings Trends Treasury Report data shows the average one-year fixed bond pays 0.50% more than the longer-term rate, with both rates seeing notable cuts month-on-month.

 

  • The average easy access rate rose to 3.17%. The average notice rate fell to 4.28%.
  • The average easy access ISA rate rose month-on-month to 3.30%. The average notice ISA rate fell to 4.13%.
  • The average one-year fixed bond fell for a fourth consecutive month to 4.62%, standing at its lowest point since June 2023 (4.21%). The average longer-term fixed bond fell for a fifth consecutive month to 4.12%, seeing its biggest month-on-month fall since February 2009. The difference in rate between the average one-year and longer-term fixed bond stands at 0.50%, with the one-year bond paying a higher average return.
  • The average one-year fixed ISA fell for a fourth consecutive month to 4.51%, standing at its lowest point since July 2023 (4.46%). The average longer-term fixed ISA rate fell for a fourth consecutive month to 4.08%, standing at its lowest point since June 2023 (4.01%).
  • Product choice overall rose month-on-month to 1,859 savings deals (including ISAs), its biggest jump since June 2023; the choice of Cash ISAs rose to 500 deals.

 

  • The average easy access rate rose to 3.17%. The average notice rate fell to 4.28%.
  • The average easy access ISA rate rose month-on-month to 3.30%. The average notice ISA rate fell to 4.13%.
  • The average one-year fixed bond fell for a fourth consecutive month to 4.62%, standing at its lowest point since June 2023 (4.21%). The average longer-term fixed bond fell for a fifth consecutive month to 4.12%, seeing its biggest month-on-month fall since February 2009. The difference in rate between the average one-year and longer-term fixed bond stands at 0.50%, with the one-year bond paying a higher average return.
  • The average one-year fixed ISA fell for a fourth consecutive month to 4.51%, standing at its lowest point since July 2023 (4.46%). The average longer-term fixed ISA rate fell for a fourth consecutive month to 4.08%, standing at its lowest point since June 2023 (4.01%).
  • Product choice overall rose month-on-month to 1,859 savings deals (including ISAs), its biggest jump since June 2023; the choice of Cash ISAs rose to 500 deals.

 

Savings market analysis – average rates

 

Feb-22 Feb-23 Jan-24 Feb-24

Average easy access rate

0.21%

1.74%

3.15%

3.17%

Average easy access ISA rate

0.26%

1.85%

3.25%

3.30%

Average notice rate

0.54%

2.49%

4.38%

4.28%

Average notice ISA rate

0.37%

2.57%

4.18%

4.13%

Average one-year fixed rate bond

0.82%

3.58%

4.87%

4.62%

Average longer-term fixed rate bond*

1.22%

3.87%

4.46%

4.12%

Average one-year fixed rate ISA

0.59%

3.41%

4.72%

4.51%

Average longer-term fixed rate ISA*

1.04%

3.68%

4.32%

4.08%

*Longer-term fixed bonds or ISAs are those with terms over 550 days. Average interest rates based on a £5,000 deposit as at the start of the month.

Source: Moneyfacts Treasury Reports

 

Savings market analysis – product count

 

Feb-22

Feb-23

Jan-24

Feb-24

Number of live savings account options (excluding ISAs)

1,223

1,288

1,342

1,359

Number of live ISA options

379

439

457

500

Source: Moneyfacts Treasury Reports

 

 

Savings market analysis – average rates

 

Feb-22 Feb-23 Jan-24 Feb-24

Average easy access rate

0.21%

1.74%

3.15%

3.17%

Average easy access ISA rate

0.26%

1.85%

3.25%

3.30%

Average notice rate

0.54%

2.49%

4.38%

4.28%

Average notice ISA rate

0.37%

2.57%

4.18%

4.13%

Average one-year fixed rate bond

0.82%

3.58%

4.87%

4.62%

Average longer-term fixed rate bond*

1.22%

3.87%

4.46%

4.12%

Average one-year fixed rate ISA

0.59%

3.41%

4.72%

4.51%

Average longer-term fixed rate ISA*

1.04%

3.68%

4.32%

4.08%

*Longer-term fixed bonds or ISAs are those with terms over 550 days. Average interest rates based on a £5,000 deposit as at the start of the month.

Source: Moneyfacts Treasury Reports

 

Savings market analysis – product count

 

Feb-22

Feb-23

Jan-24

Feb-24

Number of live savings account options (excluding ISAs)

1,223

1,288

1,342

1,359

Number of live ISA options

379

439

457

500

Source: Moneyfacts Treasury Reports

 

 

Rachel Springall, Finance Expert at Moneyfacts, said:

“Savings providers have slashed rates across fixed rate bonds month-on-month, a sentiment which may continue over the next few weeks as they jostle positions in the top rate tables amid volatile swap rates. The incentive for savers to lock into a longer-term bond may have waned in recent months and this month the average one-year fixed bond rate now returns 0.50% more than the longer-term rate. There may still be some challenger banks going against the rate-cutting trend, as these brands can increase rates over the shorter-term to attract deposits for their future lending. However, as we have seen countless times, these deals can be short-lived due to being in the spotlight. Despite these rate cuts, the shelf-life of a fixed bond remained unchanged at 39 days, so there is a good stock of deals for savers to choose from, but the rates offered are lower month-on-month. Savers must also keep in mind that, despite falls, average fixed rates across one-year bonds are 1.04% higher year-on-year.

“Despite rate drops on fixed rate bonds and ISAs, the average easy access rate has shown resilience and even rose slightly month-on-month. Not to go unnoticed, after a fall last month, the average easy access Cash ISA rate bounced back this month to stand at 3.30%, just 0.01% shy of its 2023 high. With the number of Cash ISAs rising to 500 this month, there is a positive momentum for ISA season. Those savers who locked into a one-year fixed rate ISA a year ago will find the average rate pays  1.10% more year-on-year. Consumers only have up to 5 April to use their current ISA allowance, and it is worth doing so to shield their pot from tax. According to the Bank of England, there was a total inflow of £47 billion into Cash ISAs during 2023, and with the ISA reforms coming into effect in April, it will be interesting to see if more savers use Cash ISAs this year.

“Savers may be disappointed to know that the cuts across fixed rate bonds have played their part in a substantial drop in options that pay above the Bank of England base rate of 5.25%. Indeed, around 99% of savings accounts that pay interest on a £5,000 balance now pay below 5.25%. This should encourage savers to review their accounts regularly and switch if they are getting a poor return on their hard-earned cash, particularly if they have an easy access account with a high street bank. Regardless of which account savers choose for their personal goals, providers will need to work hard to balance the ongoing volatility surrounding fixed interest rate expectations and their own deposit targets.”

Rachel Springall, Finance Expert at Moneyfacts, said:

“Savings providers have slashed rates across fixed rate bonds month-on-month, a sentiment which may continue over the next few weeks as they jostle positions in the top rate tables amid volatile swap rates. The incentive for savers to lock into a longer-term bond may have waned in recent months and this month the average one-year fixed bond rate now returns 0.50% more than the longer-term rate. There may still be some challenger banks going against the rate-cutting trend, as these brands can increase rates over the shorter-term to attract deposits for their future lending. However, as we have seen countless times, these deals can be short-lived due to being in the spotlight. Despite these rate cuts, the shelf-life of a fixed bond remained unchanged at 39 days, so there is a good stock of deals for savers to choose from, but the rates offered are lower month-on-month. Savers must also keep in mind that, despite falls, average fixed rates across one-year bonds are 1.04% higher year-on-year.

“Despite rate drops on fixed rate bonds and ISAs, the average easy access rate has shown resilience and even rose slightly month-on-month. Not to go unnoticed, after a fall last month, the average easy access Cash ISA rate bounced back this month to stand at 3.30%, just 0.01% shy of its 2023 high. With the number of Cash ISAs rising to 500 this month, there is a positive momentum for ISA season. Those savers who locked into a one-year fixed rate ISA a year ago will find the average rate pays  1.10% more year-on-year. Consumers only have up to 5 April to use their current ISA allowance, and it is worth doing so to shield their pot from tax. According to the Bank of England, there was a total inflow of £47 billion into Cash ISAs during 2023, and with the ISA reforms coming into effect in April, it will be interesting to see if more savers use Cash ISAs this year.

“Savers may be disappointed to know that the cuts across fixed rate bonds have played their part in a substantial drop in options that pay above the Bank of England base rate of 5.25%. Indeed, around 99% of savings accounts that pay interest on a £5,000 balance now pay below 5.25%. This should encourage savers to review their accounts regularly and switch if they are getting a poor return on their hard-earned cash, particularly if they have an easy access account with a high street bank. Regardless of which account savers choose for their personal goals, providers will need to work hard to balance the ongoing volatility surrounding fixed interest rate expectations and their own deposit targets.”

Notes to editors

Pioneering financial comparison technology for over 35 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 35 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Notes to editors

Pioneering financial comparison technology for over 35 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 35 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

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James Hyde Press & PR Manager
Rachel Springall Press Officer / Finance Expert
Caitlyn Eastell Apprentice Press & PR Assistant