Savers beginning to benefit

Since the Bank of England's decision to cut the base rate of interest, savers have been cast as losing out, with ever dwindling returns on their funds. However, figures from Moneyfacts have revealed that they are now actually reaping the benefits of growing fixed rates.

On the other hand, borrowers looking for fixed rate deals are experiencing very different fortunes, as the average cost of fixed mortgages have increased markedly since March.

Over the same period savers have seen the rate of fixed bonds rise; the average rate of a one year product has risen by 0.31 per cent; two year has risen 0.67 per cent; three year by 0.65 per cent; four year by 0.84 per cent; and five year by 1.13 per cent.

The average rate of two year fixed mortgage products has increased by 0.32 per cent, three year fixed by 0.15 per cent and five year fixed by 0.35 per cent

As the cost of fixed rate mortgages continue to rise, so do the rates on fixed rate bonds as providers look to their savings book for funding rather than the money markets.

As providers vie for the attention of savers, attractive rates are becoming far more prominent. To illustrate, in March there were just three bonds which paid a rate of 4.00 per cent or more – today there are no fewer than 124.

Currently, Yorkshire Bank and Clydesdale Bank lead the way, offering a rate of 5.00 per cent in their five year bonds. Conversely, the average five year fixed rate mortgage has soared by 0.41 per cent since the beginning of this month.