Derin Clark

Derin Clark

Online Reporter
Published: 18/11/2019

Consumers have faced a disappointing savings market throughout 2019, with fixed bond rates continuing to tumble and now at their lowest levels since 2017.

Data from Moneyfacts UK Savings Trends Treasury Report shows that fixed rates on longer fixed rate bonds (those with a term of 550 days or more) are at their lowest levels for more than two years. In fact, the average longer-term fixed bond rate, which currently stands at 1.54%, is at its lowest point since July 2017, when it was just 1.49%. In addition to this, the average longer-term fixed ISA rate, currently at 1.35%, is at its lowest point since October 2017, when it was 1.32%.

This year has also seen falls in one-year fixed rates on both bonds and ISAs, with the average one-year fixed bond rate currently at 1.28%, its lowest level since June 2018, when it stood at 1.28%, and the average one-year fixed ISA rate currently offering 1.21%, its lowest level since May 2018, when it was 1.19%.

Savings market analysis 

  Nov 2017 Aug 2018 Mar 2019 Nov 2019
Average one-year fixed rate bond 1.14% 1.32% 1.47% 1.28%
Average longer-term fixed rate bond 1.65% 1.82% 1.89% 1.54%
Average one-year fixed rate ISA 1.08% 1.23% 1.37% 1.21%
Average longer-term fixed rate ISA 1.40% 1.57% 1.62% 1.35%

Rachel Springall, finance expert at Moneyfacts, said: “It will be disappointing news for savers to find the positive impact of both competition among challenger banks and two base rate rises over the past two years has unravelled in such a short space of time. Indeed, this year both the longer-term fixed bond and ISA average rates hit their highest peak since the 2017 base rate rise. In March 2019, the longer-term fixed bond rate hit 1.89%, and the average longer-term fixed ISA rate had reached 1.62%, meaning they have dropped by 0.35% and 0.27% respectively over the past eight months.

“The sentiment among providers may well be that they do not want to risk paying out an inflated rate to consumers if they feel interest rates are expected to fall over the next few years. On the opposite side, savers may not want to invest in a longer-term fixed bond or ISA, and are instead opting to keep their cash close to hand. Pensioners may also be using easy access accounts instead of fixed while they decide what to do with their pension freedoms cash.

“Consumers who are still searching for a competitive fixed rate over the next few years may not want to wait too long, even if it’s just to fix for a year. Over a third of fixed rate bond providers removed their products from sale or cut rates last month. The top one-year fixed bond has now fallen below 2% for the first time in 18 months and further cuts may well come before 2019 is over.”

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