Savers Flock to Fixed-Rate Accounts Amid Expected Base Rate Cuts

Strategic Insights -

As interest rates appear to be headed downward, more people are opting for fixed-rate savings accounts to secure higher returns. On the Hargreaves Lansdown Active Savings platform, the proportion of all savings accounts that were fixed-rate rose from 55 per cent in February to 64 per cent last month. Savers can now get up to 4.5 per cent on a one-year bond from Cynergy Bank, 4.43 per cent on a two-year bond from Birmingham Bank, and 4.45 per cent on a three-year fix from JN Bank. Easy-access accounts, on the other hand, are likely to fall with the expected base rate cuts.

Key Takeaways:

  • 55% of savings accounts on the Hargreaves Lansdown Active Savings platform were fixed-rate in February, rising to 64% last month.
  • Savers can secure up to 4.5% on a one-year bond from Cynergy Bank, 4.43% on a two-year bond from Birmingham Bank, and 4.45% on a three-year fix from JN Bank.
  • Easy-access rates are expected to fall with the anticipated base rate cuts, forecasted by Barclays to reach 3.5% by February.
  • Most easy-access savings products from major banks have strings attached, with rates that drop significantly when withdrawals are made.
  • Fixed-rate bonds have fallen in value over the past year, with the top one-year account decreasing from 4.8% in December and the top two-year bond dropping from 4.6%.
  • The top easy-access rate has fallen from 4.85% over the same period and from 5.4% since last June.

Statistics:

  • 55% (February) to 64% (last month) proportion of all savings accounts on Hargreaves Lansdown Active Savings platform that were fixed-rate.
  • Up to 4.5% on a one-year bond from Cynergy Bank.
  • 4.43% on a two-year bond from Birmingham Bank.
  • 4.45% on a three-year fix from JN Bank.
  • Anticipated base rate cut from 4.25% to 3.5% by February, forecasted by Barclays.
  • Top one-year fixed-rate account has fallen from 4.8% since December.
  • Top two-year bond has dropped from 4.6% since December.
  • Top easy-access rate has fallen from 4.85% over the same period.
  • 5.4% since last June.

Sources:

  • "Hargreaves Lansdown"
  • "Cynergy Bank"
  • "Birmingham Bank"
  • "JN Bank"
  • "Hampshire Trust Bank"
  • "Atom Bank"
  • "Cahoot"
  • "Barclays"
  • "Moneyfacts"
  • "Mark Hicks from Hargreaves Lansdown"
  • "Anna Bowes from The Private Office"
  • "Andrew Hagger from Moneycomms"