SAVINGS ALERT: Fixed rates are rising!

Wednesday, 22 July 2015

It’s always nice to bring savers some good news, and this week, we can do just that – average rates across the fixed market have ALL increased! It’s the first time that this phenomenon has been witnessed since September last year, and only the second time since 2011, so it could be a great time to get in on the fixed rate saving action.


Rising rates

 Moneyfacts’ figures show that the average one-year and long-term fixed rates both increased by 0.02% this month, now standing at 1.42% and 2.00% respectively. In the cash ISA sector, the one-year rate rose by 0.01% to stand at 1.44%, while the long-term fixed rate ISA saw the largest increase of the lot – up 0.03% month-on-month, the average rate now stands at 1.84%.

So, just who, or what, can we thank for this improvement? Well, it looks as though challenger banks have a lot to answer for, with competition between these fledgling firms having an undeniably positive impact on the market.

Challengers are taking over. In a good way!

If you take a look at our best buy charts, you’ll see that they’re dominated by lesser-known names. Many of these challenger banks have launched in the last few years – even the last few months – and have hit the market with a bang, and they’re continually overtaking each other in a race for the top spot.

But what are challenger banks, I hear you ask? Well, they’re simply smaller, less well-known banking institutions. They’re a bank as much as any other – and have the same kind of financial protection – but they typically don’t have a high street presence, and because they’re so new, they still need our cash!

Whereas high street banks have all the cash they need to stay afloat, newer banks still need to build capital to boost their cash reserves. In order to do this, they need to attract savers’ deposits – and they’re doing that by offering higher rates of interest than their well-known counterparts. So why not take advantage?!

Top fixed rate accounts

Here’s a quick overview of the top fixed rate bonds in each tier (one-year, two-year, three-year, etc.), and as you can see, every single one of them comes from lesser-known names. But don’t let that put you off – with such great rates, it could be time to give the new kids on the block a try!

  • One-year bond

AER Notice / Term Min Invest Account Opening

Fixed Rate Bond
2.15% 18 Month Bond £1000 Online

  • Two-year bond

AER Notice / Term Min Invest Account Opening

Fixed Rate Bond 2 Year Term (Series 11)
2.33% 30.06.17 £1000 Online

  • Three-year bond

AER Notice / Term Min Invest Account Opening

Fixed Rate Savings Account
2.70% 3 Year Bond £10000 Postal

  • Five-year bond

AER Notice / Term Min Invest Account Opening

Fixed Rate Savings Account
3.30% 5 Year Bond £10000 Postal

  • Seven-year bond

AER Notice / Term Min Invest Account Opening

Fixed Rate Bond 7 Year Term (Series 19)
3.11% 30.06.22 £1000 Online