
On average, deals for fixed rate bonds were available for savers for just 33 days in January, following a fall from 57 days in December, according to Moneyfacts’ UK Savings Trends report.
Prices for the product remained at 4.18%, which is also as small as it has been for over 18 months, and the longer-term fixed bonds of three and five years crept up to 3.91% during January.
This means the gap between the two term lengths is as narrow as it has been since September 2023.
At this point last year, one-year fixed rate bonds were available for an average of 4.87% and longer-term bonds were on the market at an average of 4.46%.
Elsewhere, the average easy-access rate dropped to 2.89% in January, its lowest level since August 2023’s 2.8% average.

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However, the average fixed ISA rate increased slightly (by 0.1%) to 4.07%, with longer-term options rising by an average of 3.9%.
Across the savings sector, the number of products fell to 2,116 savings deals, with choices in the cash ISA market dropping to 574.
With inflation easing to 2.5% in January and the economy creeping up to 0.1% growth, experts have predicted that a base rate cut as early as 6 February could happen, which could impact the level of interest rates for customers.
One member of the Monetary Policy Committee (MPC), which is the group tasked with voting for the base rate, feels cuts should be “accelerated” to 3.25% over the year from its current 4.75%.
‘Longer-term fixed bond could become more desirable’
Rachel Springall, finance expert at Moneyfacts, said: “Savers may be concerned about the expectations for interest rates to come down this year, so a longer-term fixed bond could become more desirable.
“However, their popularity hinges on whether savers hunting for a guaranteed return feel content to lock their cash away for longer. It is worth noting that one-year bonds have been paying higher rates on average than longer-term bonds since July 2023, so it’s understandable for savers to be attracted to a shorter-term deal.”
Springall added: “It’s impossible to make predictions on interest rate moves, but providers have been watching the markets very closely, and in December, repricing activity was prevalent.
“This is even more pressing for those who may breach their Personal Savings Allowance (PSA) and start paying tax on the interest they earn beyond the set thresholds. Whichever type of account consumers choose this year, providers need to work hard to tailor their range to suit unique needs and serve their savers well.”