Best buy fixed-rate savings accounts are on the up: Average interest rates at highest in more than two years
- Savings Champion index shows fixed-rate savings deals are improving
- Best buy deals are at highest levels since early 2016, data reveals
- Still a long way off top fixed-rate bonds seen in 2012
Best buy fixed-rate savings accounts have hit levels not seen for more than two years, new research suggests.
In the last week, a number of new best buy bonds have launched meaning savers can now get better deals than at any time since the start of 2016, according to an index from independent advice website Savings Champion.
The averages of the top five best buys for each fixed-rate term have fallen overall since 2012, but have been heading upwards since early 2017.
Happy pig: Fixed-rate savings deals are slowly creeping back up
The highest percentage increase is the one-year fixed-rate cash Isa average, which has improved by more than 13 per cent from six months ago, followed by the one-year fixed-rate bond average at 10.7 per cent.
Tom Adams, head of research at Savings Champion, said: ‘Fixed accounts are one of the most competitive areas of the savings market among providers, particularly the so-called challenger banks, so this is where we often see movement, as these providers encourage funds in.
‘As providers actively compete, so too are rates pushed up and while this upward movement is perhaps not at the pace that savers would like, it is heading in the right direction.
‘This can work both ways however, as appetite amongst providers drops, so too will competition and then rates.
‘But with the end of the Funding of Lending Scheme and Term Funding Scheme earlier in the year, there is cause for optimism for savers because, as these sources of funds dry up, the providers will need to look to encourage savers in to fund their lending activities.
‘If providers need savers’ money, then the rates will continue to edge upwards as they compete with each other to get the funds they need.’
Rising: The Savings Champion index shows that all fixed-rate terms are edging up
This compares to a best buy easy-access rate of 1.33 per cent from the Post Office and 1.35 per cent for an Isa version, again from Al-Rayan.
For cash Isa versions, the top two-year rate is 1.8 per cent from Al Rayan and 2.25 per cent over five years from United Trust Bank.
Savers who want to beat the current Consumer Prices Index rate of inflation of 2.4 per cent have to fix for five years to do so.
The Savings Champion data is updated daily and looks at the average rate of the top five best buy accounts.
Savers are also way off the dizzy heights of 2012, when Savings Champion first starting compiling the data.
Back then, the top best buy one-year rate was more than three per cent, higher than the current average for a five-year fix today.
THIS IS MONEY’S FIVE OF THE BEST SAVINGS DEALS