Savers looking to lock in an attractive deal are in luck – rates have now reached their highest levels since 2008.
The average rates on one-year and longer-term fixed rate bonds and fixed-rate Isas have tipped over 5 per cent for the first time since 2008, Moneyfacts data shows.
Average savings rates across easy-access, notice accounts and the equivalent Isa accounts now stand at levels not seen in 15 years.
Rates on easy-access accounts, notice accounts, easy-access Isa and notice Isa accounts rose for the 19th consecutive month, the first time on Moneyfacts’ records since it began recording this data in 2007.
On a high: Average savings rates have now reached their highest levels since 2008
The average easy-access savings rate has risen to 2.95 per cent and stands at its highest level since November 2008.
Notice account rates have risen to 4.04 per cent, breaching 4 per cent for the first time since March 2008, which was also its previous peak in Moneyfacts’ records.
The average easy-access Isa rate rose to 3.04 per cent and stands at its highest point since December 2008 and notice Isa rates rose to 3.8 per cent, the highest level since November 2008.
Longer-term fixed bonds – those with terms over 500 days – rose to 5.12 per cent and stand at the highest peak since November 2008.
The average one-year fixed Isa rose to 5.19 per cent, the highest point since November 2008.
The average longer-term fixed Isa rate rose to 5.02 per cent and stands at its highest point since November 2008.
How close are we now to the top of the market?
Savings experts believe that fixed rate bonds and Isas have peaked.
James Blower, founder of website Savings Guru thinks that the top fixed-rate bond from NS&I, paying a bumper 6.2 per cent rate, may only be available for a week or so more.
Rachel Springall, finance expert at Moneyfacts points out that the average shelf life of fixed rate bonds stands at 32 days, which is much lower than 46 days six months ago, according to Moneyfacts data.
She says: ‘This means savers will have less time to grab a fixed rate bond compared to the start of the year, so it’s imperative they sign up to rate alerts to stay in the know.’
You can get ahead of the pack on the best savings rates by signing-up to our Savings Alert service to hear about the top deals as they arrive.
|Type of account||Sep-21||Sep-22||Aug-23||Sep-23|
|Average easy access rate||0.17%||0.84%||2.80%||2.95%|
|Average easy access ISA rate||0.24%||0.92%||2.86%||3.04%|
|Average notice rate||0.47%||1.41%||3.83%||4.04%|
|Average notice ISA rate||0.31%||1.21%||3.64%||3.89%|
|Average one-year fixed rate bond||0.67%||2.29%||5.18%||5.34%|
|Average longer-term fixed rate bond||0.94%||2.67%||5.00%||5.12%|
|Average one-year fixed rate ISA||0.49%||1.96%||5.00%||5.19%|
|Average longer-term fixed rate ISA||0.79%||2.35%||4.91%||5.02%|
|Source: Moneyfacts UK Savings Trends Treasury Report|
Easy-access accounts may yet have a further to go and could get a boost if the base rate moves to 5.5 per cent later this week.
Andrew Hagger, founder of personal finance website MoneyComms says: ‘I think we are pretty much at the peak now as far as fixed-rate bonds and Isas are concerned.
‘We may see a further small uptick in easy-access rates if the Bank of England raises rates by 0.25 basis points on Thursday, as many economists are predicting.
‘Inflation figures for August out on Wednesday are expected to show a further reduction in CPI inflation, so I think that rates will slowly start to slip back.
‘However the intense level of competition means it will be gradual and we’re unlikely to see rates drop like a stone.
‘If you haven’t reviewed your savings recently, now is a good time to check your rate and move to a table topping rate while you still can.’
Earlier this month the governor of the Bank of England, Andrew Bailey, told MPs at a Treasury Committee meeting that rates were ‘much nearer the top of the cycle’ following last month’s base rate hike – which was the 14th in a row – to 5.25 per cent.
Some economists believe that the chances are now that there will be just one further base rate rise, or even none.
But most agree that the Monetary Policy Committee will raise rates again at the next meeting later this week by 0.25 per cent to 5.5 per cent.
Because of this, Anna Bowes, co-founder of website Savings Champion says: ‘For savers it could mean that now is the time to lock into some of the excellent rates that are currently available, before the base rate peaks and then potentially starts to fall once again.’
Springall says: ‘Savers may be delighted to see average rates reaching levels not seen since 2008. The average rates on one-year and longer-term fixed bonds and Isas all stand above 5 per cent for the first time in almost 15 years.
‘Due to intensive competition among challenger banks, average fixed rates have risen for the past six months. This will come as good news to those who may be coming to the end of their fixed bond or Isa, as much higher returns can be found.’
‘Savers who want flexibility with their cash will find the average easy-access rate rose to 2.95 per cent, its highest point since November 2008, when it was 3.63 per cent.
‘At the time, the Bank of England base rate was 4.5 per cent, it now stands at 5.25 per cent.
This means that the gap between the average easy-access account rate and the base rate was much narrower in 2008, when it was 0.87 percentage points than today, where it stands at 2.3 percentage points
Springall adds: ‘There is room for improvement and some savers may not be feeling the full benefits of the consecutive base rate rises, nor might they be getting the best possible return if they fail to switch.’
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