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Fixed savings rates have been heading on a welcome path recently, with many averages rising consistently in recent months. Now, we've just hit another milestone: figures from the latest Moneyfacts UK Savings Trends Treasury Report highlight that all fixed bond rates increased this month, the first time the whole market has risen since October 2015.
The table below highlights the gains made over the last month, with the average one-year non-ISA rate rising by 0.03% to 0.95%, while the average long-term equivalent has risen by 0.04% for the second month running to stand at 1.38%, the highest seen since August 2016.
|Average one-year fixed rate (excluding ISAs)||1.12%||0.90%||0.92%||0.95%|
|Average long-term fixed rate (excluding ISAs)||1.56%||1.25%||1.34%||1.38%|
It isn't only the non-ISA sector that has seen an improvement, either. Fixed ISA rates have seen an even greater uptick over the last month, with the average one-year ISA rate up by 0.11% to stand at 0.92% – the highest rate since October 2016 – while the long-term ISA rate has seen a rise of 0.12% to stand at 1.15%, marking the fifth consecutive monthly increase and the highest seen since last September.
We haven't recorded such a strong increase in the one-year ISA rate since February 2012, when it rose by 0.10%, and likewise the long-term ISA rise was the strongest seen since April 2013 (+0.14%), which makes this month's movement particularly significant.
Rachel Springall, finance expert at Moneyfacts, said it was "encouraging to see some recovery in the savings market", with there appearing to be a keen desire among providers to attract savers for fixed rate terms – and not just the longest tie-ins.
"Our statistics show that 36% of providers – just over a third of the market – either increased rates on their fixed rate bonds last month or launched new products," added Rachel, "yet the biggest high street banks are conspicuously absent. This proves that challenger banks and mutuals are making every attempt to improve the deals they have on offer in the hopes of securing deposits for a year or more, while the biggest banks don't desire savers' funds.
"However, the sentiment to commit to saving, let alone in a fixed rate bond, may not be getting through to consumers, with recent statistics from the ONS showing that the UK household savings ratio fell to its lowest level since the 1960s. This clearly demonstrates that consumers are borrowing more and saving less, likely thanks to the low interest rate environment.
"While there is still great room for improvement when it comes to rates overall, savers should expect to find some better fixed rate bonds on offer since the start of 2017 at least, which is especially true if they are prepared to invest with a more unfamiliar brand."
Compare the best fixed savings rates to take advantage of heightened competition
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