Buy a one-year bond today or you'll lose thousands, experts warn
Savers have been urged to lock in the best deals or risk missing out on thousands after rates start falling.
The Bank of England is expected to cut interest rates from 4.5pc to 4.25pc on Thursday amid growing concerns about the economic impact of Donald Trump's tariff announcements.
This could be followed by up to three more rate cuts in 2025, economists predict, with some expecting the Bank Rate to fall to 3.5pc by early next year.
However, this means savers may be running out of time to secure the top deals.
Anna Bowes, of financial advice firm The Private Office, said: 'If you've been thinking about locking away some of your savings, now might be a good time to act – before rates fall further.'
Some fixed-rate accounts have already dropped in anticipation of a rate cut.
The average rate on a one-year bond has fallen from 4.19pc to 4.12pc month-on-month, according to financial data provider Moneyfacts.
Fixed-rate savings accounts let you lock in a certain rate for a specific period – generally the longer you lock your money away, the higher the rate.
Sarah Coles, of stockbroker Hargreaves Lansdown, said: 'You'll need to pick the right length of fix for your circumstances – or a combination of a few of them – but if rates continue to come down as expected, these deals will look increasingly attractive.'
Tandem Bank, GB Bank and Cynergy Bank are currently offering the highest rate on a one-year deal at 4.55pc. A saver holding £85,000 in a one-year fixed rate bond paying 4.55pc would earn £3,949 in interest.
By comparison, a bond paying just 3pc would earn them only £2,585 – a difference of £1,364. The top rate on a two-year bond is slightly lower at 4.48pc with JN Bank.
Savers are generally advised not to hold more than £85,000 with any one financial provider. This is because £85,000 is the maximum they can claim under the Financial Services Compensation Scheme if the firm goes under.
Savings rates have been coming down ever since the Bank of England started cutting rates last year as inflation cooled.
Caitlyn Eastell, of Moneyfacts, said: 'In the past year, many of the top rates have tumbled, savers coming out of a one-year bond could now be £53 worse off in real cash terms.'
Banks are usually quick to pass on rate reductions to savers, with over 40 providers slashing the rates on their accounts in the week after the last rate cut in February.
On the bright side, a rate cut should bring some relief to mortgage borrowers. Lenders have already started slowly lowering rates which means some homeowners may see a reduction in their monthly payments when they come to remortgage.
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