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Savings rates hit 14-year high

Paloma Kubiak
Written By:
Paloma Kubiak

The consecutive month-on-month savings rate rises mean they stand at a 14-year high, while choice of product has also increased for savers.

All variable savings products in the easy access, notice and ISA equivalent categories have risen for 12 straight months, according to data from Moneyfacts.

It said this is the first time on its records (it started compiling the data in 2007) that it has recorded these rises.

For the average easy access (1.74%) and notice accounts (2.49%), the rates on offer have hit a 14-year high. This time last year, the average rates stood at just 0.21% and 0.54% respectively.

Meanwhile, easy access ISAs have also seen their rates rise month on month to an average 1.85%, whereas last year, savers could earn an average of just 0.26%. Notice ISAs offer an average 2.57%, taking them to a high last seen in January 2009, up from 0.37% in February 2022.

Rachel Springall, finance expert at Moneyfacts, said while rates offered across both easy access and notice ISAs stand at their highest since 2009, the margin between the two (0.72%) stands at its highest on record.

“A notice ISA may then be an alternative for savers who want a bit of flexibility, but desire a higher rate than may be on offer on an easy access ISA”, she said.

Fixed savings rate rises

Turning to one-year fixed rate bonds, these stand at an average of 3.58%, the highest point since December 2008, while the ISA equivalent has risen to an average 3.41%. By contrast, this time last year they stood at an average of 0.82% and 0.59% respectively, so fixed rate ISAs are a “notable 2.82% higher than that of a year ago”.

Moneyfacts also revealed that product choice has risen to 1,727 savings deals, representing the biggest month-on-month increase since March 2022. This time last year, there were 1,223 products, while in January 2021, there were 1,064.

The number of live ISA products has risen from 323 in February 2021, to 379 in February 2022, to 439 today, “edging closer to record-breaking levels”.

Springall said the consecutive Bank of England base rate rises, coupled with competition among challenger banks, has led to both the average easy access and notice rates hitting their highest levels in more than 14 years.

She said: “Fixed bond rates appear to be in much demand from savers, but at the same time, there are those dipping into their more flexible pots, according to recent figures published by the Bank of England. There was an outflow of £1.2bn from interest-bearing sight deposits in December 2022 and demand for fixed accounts recorded an inflow of almost £7bn into time deposits.

“Our own data shows volatility surrounding fixed bond rates has softened after recent months of uncertainty, with the average shelf life of fixed bonds rising to its highest level since May 2022, up from 29 days to 48 days, the biggest month-on-month rise in more than two years (December 2021).

“However, when providers review their market positions, a standout top rate that sits way above its nearest competition may not be around for long, particularly if offered by a challenger bank that reaches its funding targets.”