Following last week's revelation that savings rates were edging up, our latest research shows that this continues to be the case, with the majority of fixed savings rates rising for yet another month!
The figures, taken from our latest UK Savings Trends report, show that three out of the four fixed sectors we monitor registered an increase in their average rate this month, of which the most significant was the long-term ISA rate. Now standing at 1.95%, it marks an increase of 0.06% on a monthly basis – it may not sound like much, but any increase is welcome given the state of the market in recent months!
This is the third consecutive monthly rise, too, a pattern that's shared with the one-year ISA rate, which rose by 0.03% this month to stand at 1.47%. Activity was slightly less impressive in the non-ISA sector, with the long-term rate remaining unchanged at 2.04% and the one-year rate up by 0.01%, but at 1.46%, it marks the highest rate seen since December last year.
As you can see, things are definitely showing signs of improvement! Even rates in the variable sector aren't giving too much cause for concern, with most remaining resolutely unchanged. Only the average notice account rate saw a reduction, but even this was minimal (down by 0.02% to 0.80%), and suggests that the tide could be starting to turn for savers.
Why the change?
Much of the overall improvement is down to mounting speculation over the path of base rate. Essentially, as the general consensus is that base rate will rise at some point next year, consumers are reluctant to lock their money away in a fixed rate bond in the hope that savings rates will rise further once base rate starts to move.
However, a fixed account is precisely where providers want you to keep your money – in variable rate accounts, you're free to move your cash at will, but with a fixed rate bond, you're tied to them for the length of your chosen term – and providers are trying to tempt you to save into them by increasing fixed rates.
So why not take advantage of it? We're not suggesting that you should fall hook, line and sinker for their plans, but if you were considering locking your money away for a while anyway, now could be the perfect time to take the plunge. Besides, there's no guarantee that a rise to base rate will automatically lead to a rise in savings rates, so you could be missing out on the higher returns of a fixed rate bond for nothing!
And, if you want the best of both worlds, you could always consider a short-term bond. Locking your money away for a year, for example, will mean you can secure a great rate now yet will have the freedom to re-evaluate things should base rate rise in the next 12 months, and thanks to growing competition, you can be safe in the knowledge that you're getting a great rate. Why not check out our best buys to get started?
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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