Are fixed savings rates stalling? No new best buys have been launched for over a week

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After months of rate rises, parts of the savings market appear to finally be stalling after a number of the best-paying accounts were withdrawn.

The past seven days represented the first full week in months without a new best buy launched across all fixed rate lengths.

Last week, the Bank of England upped the base rate from 2.25 per cent to 3 per cent, leaving many people hopeful this would further boost savings rates.

However, with many banks and building societies having already priced in future base rate hikes, it appears that some areas of the savings market may have already peaked. 

At the summit: The best fixed rate deals appear to have reached a peak last week with a number of the best buys having since been withdrawn

At the start of November, one-year rates were as high as 4.65 per cent, however, Oxbury Bank has since withdrawn that best-buy deal.

Meanwhile, RCI Bank, BLME, and Vanquis Bank which were all paying 4.6 per cent have also withdrawn their deals.

The best one-year fix now pays 4.45 per cent, courtesy of Ford Money. 

Month-on-month there is a clear slowdown at the top of our independent best buy tables.

This time last month the best one-year fix paid 4.4 per cent – only 0.05 percentage points below the current best buy. 

Go back exactly one month before that and the best buy was paying 3.32 per cent – 1.13 percentage points less than what’s available today.

The best two-year fixes remain up on where they were a month ago. The best deal was 4.7 per cent, now the best deal pays 4.85 per cent.

However, until recently there were deals paying 5 per cent courtesy of Vanquis Bank and BLME. Both have now been withdrawn.

Similarly, the best three-year fixes peaked at 5 per cent in recent weeks. However, the best rates available now pay 4.9 per cent.

Across the broader market the average rate is still ticking up, although there are some indications of the pace slowing. 

The typical one-year fix has risen by 0.05 percentage points from 3.52 per cent to 3.57 per cent over the past week.

The previous week, the typical one-year fix rose by 0.21 percentage points from 3.31 per cent to 3.52 per cent.

Typical savings rates are still continuing to tick up, but the top of the market appears to have come to a standstill

Typical savings rates are still continuing to tick up, but the top of the market appears to have come to a standstill

A spokesperson for the Savings Guru said: ‘On fixed rate bonds, there’s two things that are happening. Firstly, providers have priced in future rises in their current rates so we are not going to see big increases from here.

‘Also, longer term swap rates and market expectations on where Base Rate is going to peak are falling.

‘Currently, fixed rates are over priced by comparison to both these, which suggests we probably have peaked for the short term and there’s a risk of falls.

‘Last week was the first in months that the best buy rate didn’t increase on any of the fixed rate terms.

‘There’s actually been several best buy rates pulled this week and there’s been some planned rises cancelled.’

For those considering fixed rate savings deals at present it may be a good time to take the leap, as rate growth seems to be slowing. 

The Savings Guru added: ‘It will only be competition between banks that can drive rates up from here. Of course, there is always the potential for one or two banks who need cash who will pay over the market rate to get it.

‘However, relying on this is highly speculative so I’d certainly say to savers that it may well be safe to grab fixed rates now or they could be disappointed.

‘At Savings Guru, we’ve seen savers waiting for 5 per cent on a one-year and we have warned them that our view is they will be disappointed if they wait for that.’

What about easy-access rates?

The top of the easy-access savings market was presenting a similar story, until yesterday when Aldermore launched a best-buy rate paying 3 per cent. 

The previous best easy-access deal on the market, paying 2.81 per cent had not been beaten for three weeks.

During that time, its closest competition fell away. Gatehouse Bank withdrew its 2.8 per cent deal last week, whilst Sainsbury’s Bank and Santander recently withdrew deals paying 2.75 per cent.

The Aldermore deal does have a catch in that it is a Double Access deal* and only permits two withdrawals per year. Any extra withdrawals will see the the rate plummet to 0.1 per cent.

For those requiring unlimited access to their cash – Aldermore still pays 2.75 per cent for full easy-access.*

In terms of the easy-access cash Isa market, rates have also been improving of late.

Ecology Building Society this week launched a new best buy paying 2.7 per cent following Marcus’ 2.5 per cent deal last week.

Those who bank with Virgin Money, Clydesdale Bank or Yorkshire Bank also now have access to an exclusive Virgin Money easy-access cash Isa deal paying 3 per cent.

This time last month the best easy-access cash Isa was paying 2.25 per cent, so there has been solid improvement for easy-access savers wishing to keep their cash within a tax-free wrapper. 

Going higher: The Savings Guru is predicting that more easy-access rates will breach 3 per cent over the coming weeks and months

Going higher: The Savings Guru is predicting that more easy-access rates will breach 3 per cent over the coming weeks and months

The Savings Guru believes easy-access savings accounts in general, whether held in an Isa or a standard account, will see further rate hikes from here.

The spokesperson for the popular savings website said: ‘On easy-access, it is a different position because banks can place surplus money with the Bank of England at base rate.

‘Given that only Virgin’s easy access Isa and Aldermore’s Double Access account is the only account at base rate, and base is expected to rise further again in December, we think there’s scope for easy access rates to go higher from here. 

‘So while we’d say move now for the best rates anyway, we wouldn’t advise that people just stay put once they sign up to a particular deal.

‘If you aren’t earning 2.4 to 2.5 per cent, then move you money to a provider that is offering this. But keep alive to changes and be ready to move again in the near future.’

One slightly more niche area of the savings market that has seen significant improvement over the past couple of months have been notice accounts.

The average notice account has risen from 1.41 per cent to 2.06 per cent since the beginning of September.

The best 180 day notice account currently pays 3.5 per cent, the best 90 day deal pays 3.4 per cent, both courtesy of Oxbury Bank.

THIS IS MONEY’S FIVE OF THE BEST CURRENT ACCOUNTS

Chase Bank will pay £1% cashback on spending for the first 12 months. Customers also get access to an easy-access linked savings account paying 1.5% on balances up to £250,000. The account is completely free to set up and is entirely app based. Also no charges when using the card abroad.

Lloyds Bank

The Club Lloyds account offers £150 free cash when you switch. It also pays 0.6% on balances up to £4,000, and 1.5% on £4,000 – £5,000. There is a £3 monthly account fee to pay. But this is waived each month that you pay in £1,500 or more.

Natwest

HSBC’s Advance Account pays £200 when you switch. You just need to set up two direct debits and deposit £1,500 in the account within 60 days of opening it.

Santander

First Direct will give newcomers £175 when they switch their account. It also offers a £250 interest-free overdraft. Customers must pay in at least £1,000 within three months of opening the account.

Nationwide

Nationwide’s FlexDirect account comes with up to £200 cash incentive for new and existing customers. Plus 5% interest on up to £1,500 – the highest interest rate on any current account – if you pay in at least £1,000 each month, plus a fee-free overdraft. Both the latter perks last for a year.

Barclays

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