Savers in search of long-term options for their money have seen average rates slip below 4% for the first time since spring 2023. According to Moneyfacts, the market’s average rate for a longer-term fixed bond (beyond 550 days) dropped to 3.99% at the beginning of September, down from the 4.13% seen earlier in August.
The Mirror reports that this marks a contrast to the previous year, where savers could typically expect a return of 5.12% on such bonds. These calculations are based on a £5,000 initial deposit and utilise the highest average rates available from the start of each month.
Rachel Springall of Moneyfacts said: “Those looking to lock in for longer will find the average longer-term fixed bond rate dipped below 4% for the first time since April 2023.” Data additionally indicates a decline in the average long-term fixed Isa rate, which commenced September at 3.92%, a decrease from August’s 4.08%, and significantly lower than the 5.02% from the same time last year.
For money-saving tips, sign up to our Money newsletter here. The last instance the average rate for Isas was under 4% came in May of this year, reaching 3.89%, as Moneyfacts recorded. Ms. Springall said both variable and fixed savings rates generally experienced a reduction during August.
She said: “The downward path was perhaps an inevitable direction after the Bank of England base rate was cut (from 5.25% to 5%), but it can take a few weeks for providers to make a move in response. One area of the savings market to take a hit has been easy access accounts, seeing the biggest month-on-month drop since April 2024.
Those savers who have not reviewed their savings accounts would be wise to do so, to ensure they are still paying a competitive return.” The average rate of easy access savings accounts dropped from 3.14% in August to 3.07% in September, as noted by Ms. Springall, who advised: “Whichever account savers choose, it is imperative that they explore the more unfamiliar brands, as challenger banks currently pay some of the best rates on the market.
However, these deals can change quickly, as providers need to react swiftly to any market movements to compete with their peers.”