Savers need to look to the long term if they want to get the best savings rates on offer, new research from Moneyfacts.co.uk has revealed.
While the Bank of England base rate has remained steadfastly unchanged at 0.5% since March last year, the average rate available on a five year fixed rate bond has jumped from 3.08% to 4.54% in that time, a rise of 1.46 percentage points.
Yet over the same period, the average rate on offer through one year fixed rate deals has increased by just 0.22 percentage points, from 2.79% to 3.01%.
Four year deals currently offer an average rate of 4.09%, three year deals 3.95% and two year deals 3.71%.
This recent trend is in stark contrast to that seen when the base rate first began its decline back in October 2008.
At that point, one year bonds offered an average rate of 6.18%, higher than the 5.06% available over a five year term, as banks and building societies looked for short term funding solutions to the chaos created by the credit crunch.
Now, with credit conditions easing and providers keen to give their balance sheets a meaningful boost, it appears that the focus has turned to the long term.
The danger for savers willing to chase the higher rates today is that they could miss out on even better ones once the base rate begins to rise.
Compare Long term fixed rate bonds
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