Fixed rates see biggest monthly rise in a decade
The average one-year fixed rate bond stands at 1.24% in May, up from 1.06% in April.
This takes the rate to its highest level in over two years, according to data site Moneyfacts. It added this is the biggest month-on-month rise since April 2011.
Meanwhile the average long-term fixed rate bond rose from 1.48% to 1.68% in the month to May which is the biggest rise since August 2009. It also stands at its highest level since August 2019 (1.72%).
Turning to ISAs, Moneyfacts data revealed the average one-year fix stands at 1.02%, up from 0.87% in April. This is the first time it has breached 1% since April 2020. Further, the rate is also at its highest point in over two years.
The average longer-term fixed ISA rate has also risen to 1.49% which Moneyfacts said is the biggest month-on-month rise since July 2008.
There’s also good news for savers with easy access accounts as the average rate has risen to 0.39% and stands at its highest point in two years. The highest easy access rate is offered from Chase at 1.5%. See YourMoney.com’s How to get 5% interest without tying up your money for years for more information.
The number of products available to savers has also grown by 279 deals year-on-year to 1,685 savings deals (including ISAs).
This is the highest count in choice since March 2020.
Rachel Springall, finance expert at Moneyfacts, said: “Savings rates are climbing at a promising pace, but fixed rates still have room for improvement, particularly with the Bank of England base rate rising back-to-back for a fourth time and now standing at 1%, the highest it’s been since February 2009.
“Those savers who are looking to secure a guaranteed return may be pleased to see competition in the fixed rate sector, but as rates improve, some savers may not be comfortable with locking their money away for longer than a year. However, those who wish to do so will find the longer-term fixed bond average has seen the largest monthly rise since August 2009, and is the highest rate seen since August 2019.”
Springall added: “Savings providers who are working hard to secure a place within the top end of the market must keep abreast of the quick pace of their competitors or could fall outside of the top rate tables. Those savers who are comparing their options will need to decide whether to fix or keep their money in a more flexible pot, but also consider their tax-free allowances and any difference in rate between ISAs and alternative accounts that do not have a tax-free wrapper.”