- The best one-year bond has dropped from 6.2% to 4.95% in a year
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The top one and two-year fixed-rate savings accounts have dived in recent months, data from Moneyfacts Compare reveals.
Meanwhile, the top three-year, four-year and five-year bonds remain unchanged.
The top rate for a one-year fixed bond fell to 4.95 per cent, which is now 0.31 percentage points higher than the top five-year fixed bond at 4.64 per cent.
The rate gap was 0.41 percentage points the month before.
One and two-year bonds have dropped as providers price in an expected cut to the base rate in November.
In April 2024, the rate gap between the top one and five-year bonds was 0.3 percentage points cent, as they stood at 5.25 per cent and 4.95 per cent respectively.
A year ago, the top one-year bond paid 6.2 per cent, with the top five-year bond paying 5.8 per cent, a gap of 0.4 percentage points.
Over the weekend, all the remaining blockbuster NS&I one-year fixed-rate bonds paying 6.2 per cent matured.
Now, the top one-year fixed-rate bond offered by Union Bank of India pays 4.95 per cent, according to This is Money’s independent savings tables.
A saver putting £10,000 into this account would earn £506 after a year compared to £638 with NS&I a year ago. Figures crunched using the savings calculator.
The average one-year fixed-rate account pays 4.3 per cent, which is now 0.49 percentage points higher than the top five-year fixed-rate bond at 3.81 per cent, according to Moneyfacts Compare.
| Apr-22 | Oct-22 | Apr-23 | Oct-23 | Apr-24 | Sep-24 | Oct-24 | |
|---|---|---|---|---|---|---|---|
| Top one-year fixed bond | 1.85% | 4.2% | 4.54% | 6.2% | 5.25% | 5.05% | 4.95% |
| Top two-year fixed bond | 2.1% | 4.5% | 4.55% | 6.05% | 5.1% | 4.9% | 4.72% |
| Top three-year fixed bond | 2.2% | 4.6% | 4.6% | 5.95% | 4.85% | 4.72% | 4.72% |
| Top four-year fixed bond | 2.17% | 4.45% | 4.56% | 5.75% | 4.54% | 4.54% | 4.54% |
| Top five-year fixed bond | 2.4% | 4.55% | 4.65% | 5.8% | 4.95% | 4.64% | 4.64% |
| Source: Moneyfacts Compare. Top interest rates based on a £10,000 deposit as at the start of the month | |||||||
James Blower, founder of Savings Guru said: ‘One-year rates have dropped significantly, with Union Bank of India an outlier at 4.95 per cent and all other leading providers paying 4.7 to 4.81 per cent as they price in an expected cut to the base rate (to drop to 4.75 per cent) in November.’
Opening an account with a savings platform can lead to yet better rates than opening an account directly with a savings provider.
Savings platform Prosper* is currently offering boosted savings rates. At the moment the best one-year fix at Prosper is from Al Rayan Bank at 5.05 per cent*.
A saver putting £10,000 in this account would earn £516.85 after a year, according to This is Money’s savings calculator.
Caitlyn Eastell, spokesperson at Moneyfacts Compare said: ‘It is possible that the savings market could be facing more uncertain times ahead, with the fast-approaching budget and volatile repricing, which may cause providers to drop rates further.
‘Savers who are eager to lock into a guaranteed rate should do so swiftly before they face another plunge.’
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