Fixed savings rates hit record high in October - act fast before they get pulled

New data shows fixed savings rates hit a record high in October- but they won’t stick around for long as we start to see rates sliding

Coins money stacking with up arrow and percentage symbol inside magnifier glass for financial banking increase interest rate or mortgage investment dividend from business growth concept.
(Image credit: Dilok Klaisataporn)

Time is of the essence for savers to bag the best savings rates as new Bank of England (BoE) data shows fixed savings deals reached a record-high average of 5.27% in October- but MoneyWeek research shows top rates are starting to fall. 

Despite savings deals reaching a 15-year high and overtaking inflation for the first time in two years, research by investment platform Charles Stanley reveals 44% of savers are earning an average of only 3% or less on their savings, whilst 40% of savers admit they have never switched savings accounts. 

Now is the time to take advantage of a better-paying fixed savings account, as MoneyWeek data shows savings have reached their peak after the base rate was held at 5.25% for the second consecutive month, sparking  “a downturn in rates,” says Laura Suter, head of personal finance at AJ Bell.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Fixed savings deals are falling 

MoneyWeek has been tracking the best fixed savings deals and has seen rates creep up to heights of more than 6%, including NS&I’s table-topping 6.2% one-year fixed bond and Union Bank of India’s 6.11% saver. 

“Interest rates on savings accounts have reached as high as six percent in the past year, offering cash savers some great returns on their money,” says Rob Morgan, chief analyst at Charles Stanley Direct.

“Yet many have not taken advantage of this, causing them to miss out on a considerable savings boost.”

Whilst savings reached a record high again in October, our data reveals one year fixed savings fell below the 6% mark on 10 November, and rates have continued to fall since. 

Metro Bank then entered our best buy table, offering a top rate of 5.91% AER on its one-year fixed saver. Although it remains the top rate, it has fallen to 5.8% AER. 

Here are the one-year fixed savings deals that have dropped in rate in just the past week, since 22 November. 

Swipe to scroll horizontally
Savings providerOld rate AERNew rate AERCurrent rate AER
Smart Save5.76%Rate dropped to 5.71%Now 5.66%
JN Bank 5.8% 5.65% 5.65%
Close Brothers Savings 5.75% Deal withdrawn Relaunched at 5.55%
Metro Bank 5.91%5.8%5.8%
Ikano Bank 5.7%5.3%5.3%
Ford Money 5.65%5.55%5.55%
Aldermore Bank5.55%5.4%5.4%
Union Bank of India 5.9%5.7%5.7%
Habib Bank Zurich 5.8%5.5%5.5%
Charter Savings Bank5.6%5.57%5.57%
Al Rayan Bank5.85%5.7%5.7%
Tipton & Coseley Building Society6.2%Deal withdrawnRow 13 - Cell 3

14 bank providers have dropped their one year fixed deal rates in just the past week, with two deals being withdrawn. 

Stream Bank showed the biggest drop in rate, falling by 0.6% from 5.8% to 5.2%, followed by Ikano Bank with a 0.4% drop to 5.3%. 

Historically, fixed savings have offered better rates than easy-access savings. But, if fixed-rate deals continue to fall below the 5.5% mark, the gap between fixed savings and easy access savings will start to close- unless easy access rates take on the same downward trend.  

What is happening to easy access savings rates? 

Easy access savings are also falling but at a steadier pace than one-year fixed deals. In the past week, we have only seen two lenders drop their easy access rates.  

  • Cynergy Bank dropped its rate from 5.15% to 5.1%.
  • Secure Trust Bank dropped its rate from 5.1% to 5%. 

As the cost of living remains high and financial pressures rise with the festive period, it seems savers prefer to have flexibility with their money and store their savings in a low-interest easy-access account.

Mark Hicks, head of active savings at Hargreaves Lansdown, said:: “There’s still an awful lot of people being forced to raid their savings - with £1.7 billion withdrawn from easy access accounts paying no interest. 

“The HL Savings & Resilience Barometer shows that this is highly likely to be those on average or lower incomes, pushed to the limit by the cost-of-living crisis. Higher earners, meanwhile, can still afford to save.

That said, Suter believes “lots of savers had been pulling money from these accounts to funnel into fixed-rate accounts.”

What’s the outlook for interest rates? 

After a year and a half of base rate rises, the BoE finally paused the rate at 5.25% for the second consecutive month on 2 November. 

The next interest rate announcement is on 14 December, where experts predict the base rate could be paused for another month, with an expectation of rates falling in the spring of 2024. 

Vaishali Varu
Staff Writer

Vaishali has a background in personal finance and a passion for helping people manage their finances. As a staff writer for MoneyWeek, Vaishali covers the latest news, trends and insights on property, savings and ISAs.

She also has bylines for the U.S. personal finance site and Ideal Home, GoodTo, inews, The Week and the Leicester Mercury

Before joining MoneyWeek, Vaishali worked in marketing and copywriting for small businesses. Away from her desk, Vaishali likes to travel, socialise and cook homely favourites