UK households with savings accounts could earn an additional £215 per year by moving their money into fixed-term accounts offering record interest rates, according to personal finance experts at Moneyfacts. One-year fixed savings rates have climbed to 4.41%, the highest level seen since September 2024, following six consecutive months of increases.
Record rates across all terms
The average fixed rate across all terms now stands at 4.49%, the highest since December 2023. For the first time since that month, top rates are paying above 5%. A saver with £10,000 to invest over a year could be approximately £215 better off by choosing an account paying 5.15% compared to one paying 3%.
Caitlyn Eastell, personal finance analyst at Moneyfacts, said savers could earn £215 more in a year by switching to these higher-rate accounts, which pay up to 5.15%. She noted that while swap rate volatility has affected borrowers, the savings market is showing a more positive trend.
Sustained increases since 2023
Eastell explained that average non-ISA fixed rates have been rising consistently for over six months, marking the longest sustained period of increases since 2023 for one-year fixed deals and since 2022 for longer-term products. She said: “While volatile swap rates have been causing mayhem for borrowers, savings rates are telling a more positive story. Average non-ISA fixed rates have been rising consistently for over six months, and this is the longest sustained period of increases since 2023 for one-year fixed and 2022 for longer-term deals.”
She added that top rates have also seen generous rises, with fixed rates across all terms now paying above 5% for the first time since December 2023. This gives savers a welcome opportunity to secure some of the most competitive guaranteed returns in years.
Impact for savers and ISA considerations
Eastell highlighted that this could make a meaningful difference to savers whose money is currently in lower-paying accounts or those whose existing fixed bonds are maturing soon. However, she cautioned that fixed bonds require locking away money for the full term, meaning savers who secure a deal now risk missing out on even more attractive returns if rates continue to rise.
While fixed ISA rates are typically slightly lower than their non-ISA counterparts, Eastell noted that some of the most attractive fixed ISAs now also pay over 5%, meaning savers do not have to compromise on tax-free savings. During August, £4.4 billion flowed into ISAs, suggesting they remain popular among savers, particularly ahead of cash ISA changes in April. Providers may work even harder to attract savers' deposits as the deadline approaches.
