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Savings rates hit highest levels for 15 years

Rebecca Goodman
Written By:
Rebecca Goodman
Posted:
Updated:
19/12/2022

Savings accounts are now paying the highest levels of interest seen for more than a decade, according to new data.

They increased again in November, rising for the 10th consecutive month in a row for the first time since February 2007.

Rates have risen across the board on all types of account, following the Bank of England’s successive rises to the base rate. Last week, rates were pushed up again, to 3.5% adding £50 a month on average to mortgage bills.

Average interest rates highest since 2009

It’s good news for savers as interest rates have continually risen over the last few months. Here we look at the best rates currently available, according to Moneyfacts data.

  • The average interest rate for an easy-access account rose to 1.43%, the highest rate seen since 2009 when it was 1.55%.
  • Notice accounts rose to an average of 2.26%, the highest level since December 2008 when they were 2.64%, and the first time it’s been at more than 2%.
  • For instant-access ISAs, the average rate rose to 1.55%, its highest level since November 2012 when it was 1.68%.
  • The average notice ISA rate rose to 2.19%, the highest since February 2009 when it was 2.40% and the first time it has breached 2% since November 2012.
  • The average one-year fixed bond rose to 3.51%, the highest since December 2008 (4.43%), and the average longer-term fixed bond rate rose to 3.89% and is at its highest point since January 2010 (3.90%).
  • The average one-year fixed ISA stands at 3.30%, its highest point since January 2009 (3.43%) and the first time it has breached 3% since May 2012.
  • The average longer-term fixed ISA rate rose to 3.67% and stands at its highest point since July 2011 (3.67%).

Product choice overall fell for the third consecutive month to 1,690 savings deals (including ISAs), the biggest fall since April 2021.

Move fast, rates could start to fall in 2023

Successive rate rises by the Bank of England have been good news for savers but they have pushed up the cost of borrowing.

Rachel Springall, finance expert at Moneyfacts, said: “A combination of reasons has been at play for interest rates to rise at such pace, one being the consecutive base rate rises by the Bank of England throughout 2022, but also increased competition among challenger banks.

”Indeed, one area of the market to see rates reach the highest levels since 2008 was one-year fixed rate bonds, a popular arena for challenger banks seeking savers’ deposits to fund their future lending.”

While it’s not possible to predict what will happen next, there are suggestions that rate rises could slow down as we move into the new year.

“The month-on-month rises between the average fixed bond and fixed ISA rates between the start of November and December was more subdued compared to the month prior, demonstrating a more muted attitude among providers re-pricing their deals.

“This change in momentum may see rates move in the opposite direction as we enter 2023, as savings providers reassess their market positions during an unprecedented period of interest rate uncertainty. If providers cut back their rates, it can lead to other brands being more exposed on the top rate tables, leading to further cuts,” Springall added.