5 days ago
Why savers should fix NOW as easy-access rates hit two-year low
Savers are being urged by experts to potentially lock away their savings now to secure top rates ahead of a likely Bank of England base rate cut next month.
Easy-access rates have plummeted to a two-year low, according to rates scrutineer Moneyfacts Compare.
The average easy-access rate now stands at 2.68 per cent, the lowest level since July 2023 when it was 2.41 per cent.
Meanwhile the average easy-access Isa rate is 2.92 per cent, its lowest level since August 2023 when it was 2.86 per cent.
Atom Bank, offering the top easy-access rate today, cut its rate to 4.6 per cent from 4.75. per cent.
Many easy-access accounts and Isa access Isas pay north of 4 per cent, but some are artificially inflated by bonus rates with disappear after three to 12 months.
Rachel Springall, finance expert at Moneyfacts Compare says: 'The downward momentum is an inevitable turn of events, with providers adjusting their rates following four cuts to the base rate since last summer.'
Fixed-rate accounts on the other hand are holding strong, with one and two-year bonds seeing the biggest rate hikes in 11 months, according to Moneyfacts Compare.
The top one-year fixed bond rose by the largest amount since August 2024 to 4.55 per cent.
GB Bank now offers a 4.58 per cent one-year fixed rate bond while the best two-year bond pays 4.45 per cent and is offered by DF Capital.
The Bank of England will vote on whether to cut or hold the base rate on 7 August with markets pricing in a cut.
Andrew Hagger, personal finance expert and founder of MoneyComms says: 'A rate cut of 0.25 basis points is still pretty much a certainty even with the economic data published this week.'
In general, savings rates rise when the base rate is rising, and fall when it is falling.
Easy-access rates are usually the first to be slashed when the base rate is cut as savings providers react to the cut, while cuts to fixed-rate bonds tend to move more slowly.
'Easy-access deals will take a hit - maybe not falling by a full 0.25 per cent in all cases' says Hagger.
'However, with fixed-rate bonds the next cut has probably already been priced in - in most cases,' he adds.
For this reason Hagger says: 'If you've got some spare cash that you don't need for a year or two then locking some away in a fixed-rate bond makes sense as fixed rates are unlikely to increase from their current levels.'
A saver stashing £10,000 in the top one-year fix offered by GB Bank would earn £458 at the end of the term.
While a saver putting £10,000 in DF capital's two-year fixed-rate bond would earn £927 at the end of the two year term.
For savers who want to lock their savings away in a tax-free Isa to avoid paying tax on their savings interest, Vanquis Bank has a one-year fixed rate Isa paying 4.3 per cent while United Trust Bank has a two-year fixed-rate Isa paying 4.25 per cent.
