Highest fixed savings rates in almost two years | moneyfacts.co.uk

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ARCHIVED ARTICLE This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.


Lieke Braadbaart

Online Writer
Published: 16/04/2018

While many may be reluctant to sign up to a fixed rate savings deal at the moment, with rumours of a base rate rise next month still going strong, you might want to think again, as the upcoming Moneyfacts UK Savings Trends Treasury Report shows that all fixed rate averages have increased to their highest point in almost two years.

Welcome competition

Specifically, the average one-year and long-term ISA rates are now the highest they've been since June 2016, while the equivalent averages for non-ISA rates are the highest since May 2016. "April also marks the first time in six months that all the fixed rate averages have risen," added Charlotte Nelson, finance expert at Moneyfacts.

Average Rates Apr-16 Apr-17 Apr-18
One-Year Fixed Rate 1.27% 0.95% 1.22%
Long-Term Fixed Rate 1.78% 1.38% 1.69%
One-Year Fixed ISA 1.31% 0.92% 1.16%
Long-term Fixed ISA 1.60% 1.15% 1.52%
Moneyfacts Treasury Report

Once again, it's challenger banks that have stepped up to the plate, fighting to sit at the top of the fixed savings Best Buys. And once again, the high street banks are largely missing from the action, which is why the increases are rather small compared to the movement at the top of the charts.

Unlike the mainstream banks, Charlotte found that "ISA season has encouraged building societies to join the competition, with 10 of them launching new products into the market – not to mention many more increasing their fixed rate ISAs to offer some Best Buy-worthy deals." This increased competition may stem from recent SWAP rate increases, which make it more expensive for providers to fund their mortgage books, causing them to turn to other means of securing longer-term funds.

Wait and see?

It may also be that providers are "choosing to increase fixed rates to encourage savers to fix before [the base rate rise in May], keeping the interest paid out to a minimum," said Charlotte. But whatever the reason, savers don't seem to be enticed by rising rates, as Charlotte continued: "The latest Bank of England statistics show millions of pounds flowing out of fixed rate bonds into easy access accounts, as savers opt to wait and see if the base rate will rise."

In general, an increase to base rate is good news for savings and bad news for mortgages, as both see rates go up. However, the last base rate rise didn't give savers that much to cheer about, with savings rates still nowhere near their historical highs. So, while the prospect of a base rate rise certainly gives savers hope, don't wait too long, as the increased rates currently available may not last for much longer.

As Charlotte put it: "savers have now seen first-hand that an increase to the Bank of England base rate might not necessarily mean a rate rise for all. So, savers will need to keep on top of the Best Buys to ensure they get the best deal possible."

What next

Have a look at the fixed rate savings and ISA charts to see how the top rates are doing

If you're going to keep your savings in an easy access account, make sure it's a good one


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