Grab a fixed savings deal now… rates may already have peaked!

Savers may be wise to grab fixed deals now because rates could have peaked, experts say.

In recent months, savers have faced a dilemma over whether to fix or wait for better rates to come along.

But the top rate of 4.65 per cent seen last week on popular one-year bonds has vanished, with some accounts on sale for just 24 hours.

– Check out the best fixed rate savings deals here. 

And Money Mail can reveal that banks have shelved plans to launch new best-buy bonds because interest rates are not expected to rise as high as once forecast.

At the start of this month, the Bank of England base rate was tipped to go as high as 6 per cent next year. Banks reacted by pushing short-term bond rates over the 4.6 per cent mark for new customers.

But now money market traders expect the base rate to peak at a lower 4.5 per cent as inflation is brought under control more quickly than previously thought.

And that has led to a fall in the top payers and a suggestion rates have peaked.

Savers should no longer sit around waiting for rates to go up, with one-year bonds offering upwards of 4 per cent deemed good value. That’s three times the top rates of around 1.3 per cent on offer at the start of the year.

Kevin Mountford, co-founder of savings platform Raisin UK, says: ‘The rises we have seen in fixed-rate bonds have slowed down. 

‘Top rates of 4.6 per cent or over have all disappeared. If you see a bond paying north of 4 per cent for a year, grab it.’

The path of future interest rates fell because the Bank of England expects inflation to fall back from the middle of next year towards the 2 per cent target in two years’ time.

It currently stands at a 41-year high of 11.1 per cent.

Anna Bowes, from Savings Champion, says: ‘We could be at the peak on rates. Competition has waned over the last week on shorter-term bonds. But you can still earn around 5 per cent on longer-term, five-year bonds.

‘If inflation drops back as the Bank of England suggests, tying up some money at this rate will look like a shrewd move.’ There was a frenzy of activity at the end of last week as providers slashed rates for new savers.

Virgin cut its one-year rate from 4 per cent to just 3.25 per cent. Yesterday, it withdrew it from sale altogether.

Money market traders expect base rate to peak at a lower 4.5% as inflation is brought under control more quickly than previously thought

Charter Savings Bank’s two-year bond at 4.95 per cent was on sale for just one day, while the provider scrapped the launch of its one-year bond at 4.55 per cent altogether.

RCI Bank cut its one-year rate from 4.6 per cent to 4.2 per cent and United Trust’s one-year bond at 4.65 per cent was on sale for just 24 hours. 

Other top rates from Secure Trust, Tandem, Vanquis, Close Brothers Savings and Oxbury banks also disappeared.

Cuts are still coming thick and fast. This morning the one-year bond from savings giant Halifax plummeted from 3.4 per cent to 2.8 per cent for new savers, while Leeds BS headed down from 3.75 per cent to 3.4 per cent.

Now it is competition between providers for savers’ money rather than future rises in interest rates which will drive returns up.

And those top-rate bonds will disappear as soon as the bank or building society has attracted the money they need.

But any increases are unlikely to see rates much higher than they are today.

Kent Reliance bucked the trend yesterday by raising its fixed-rate bonds for new savers. Its one-year bond pays a top 4.45 per cent, up from a much lower 2.79 per cent.

Along with Kent Reliance’s 4.45 per cent, other top one-year fixed rate bonds come from Investec at 4.36 per cent, with Aldermore, Atom and TSB at 4.35 per cent.

For 18 months DF Capital pays 4.75 per cent.

If you are willing to tie your money up for five years, Tandem offers 5 per cent and Ford Money and RCI Bank pay 4.95 per cent.

Remember, you can’t get your money out of a fixed-rate bond until the end of the term.

– Check out the best fixed rates here.

sy.morris@dailymail.co.uk