Digital challenger Atom Bank has upped rates across its fixed rate deals, with its five-year product increasing from 4.4% to 5%.

This is the first time since February 2012 that a fixed rate product has offered 5%, according to Moneyfacts data.

The Atom Bank five-year fix sits at the top of the best buy table, and it leads by a comfortable distance from the next competitor offering 4.61%.

Savers can apply via mobile app (App store or Google Play) with just £50, though there’s no access within the term.

Here are the rates offered on its other fixed rate deals:

• 6 month fixed saver: Increase from 2.65% to 3.2%
• 1 year fixed saver: Increase from 4.11% to 4.25%
• 2 year fixed saver: Increase from 4.20% to 4.6%
• 3 year fixed saver: Increase from 4.30% to 4.75%.

These deals also sit among the top-five payers in their individual product categories.

Earlier this month, Atom passed £4bn in deposits from customers with cash held in its instant savings accounts and fixed saver products.

‘Laser focused on changing banking for good’

Mark Mullen, chief executive officer at Atom, said: “We’re pleased we can offer yet another increase in our fixed rate savings range, at a time when people are facing the worst cost-of-living crisis in a generation. Making sure savers get a better deal is an important part of our mission and we continue to lead the way in the current environment.

“We will continue to offer our customers the best rates we can with exceptional service, something which is made possible by Atom’s high levels of automation and digitally native model. We know times are tough, and while many high street banks refuse to pass on recent rate hikes, we remain laser focused on changing banking for good, for the better, and for everyone.”

Should you fix for so long?

Rates are rising at pace but many savers may wonder whether it’s a good idea to tie-up their cash for such a long period of time.

Households should keep an emergency buffer of around three to six months’ worth of cash in an easy access account.

Competition in the one-year fixed rate space is fierce, with savers able to gain 4.35% currently from Aldermore.

And according to Hargreaves Lansdown, swap rates indicate that one-year rates could hit 5% soon.

However, there is a way for savers to earn 5% on their cash without having to tie it up for years.

Sarah Coles, senior personal finance analyst said: “waiting for a better fixed rate is a perfectly reasonable approach, as long as you have answered two questions.

“At what point will you feel rates have risen enough for it to be worth fixing? And where will your cash be in the interim?

“It’s notoriously difficult to spot when rates have peaked, until after they have done so. So, if you hang on until it’s obvious, you’ll have waited too long. Instead, it’s worth making a decision about the interest rate you would be happy to fix at.”

Meanwhile, calculations from Savings Champion reveal the effect of ‘waiting for a better deal’, particularly for those whose cash is in a current account earning zero interest and the equivalent rate they would need to gain in order to make up the time out of the deal.

Anna Bowes, co-founder of Savings Champion, said: “The difficultly of guessing what will happen is that often bond rates have already priced in market expectations of further base rate rises. The markets are expecting the base rate to rise further in the shorter term, but not over the longer term.”

She added that very few bonds allow early access “so you really do need to be confident that you can tie up your money for the term, before you commit”.