Metro Bank cuts top one-year savings rate - what can you earn now when you fix?

The embattled high-street lender Metro Bank staged a comeback last month, after boosting the rates on its one-year fixed and easy-access savings accounts and topping our best-buy tables.

But there’s bad news for savers as the provider has now slashed the rate on its one-year fixed saver from 5.8% to 5.66% AER. 

The bank started offering an attractive 5.91% one-year fixed saver on 10 November, on the same day that the best one-year fixed savings accounts fell below the 6% mark - suggesting savings rates had hit their peak. 

Try 6 free issues of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up for MoneyWeek’s free twice-daily newsletter.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Sign up

The 5.91% rate then dropped to 5.8% on 23 November, but it remained at the top of our best-buy table. Today (12 December), the lender’s one-year fixed savings rate has plummeted again, to 5.66% AER. 

Find out what you can now earn if you fix your savings for a year, plus the latest outlook for interest rates. The next Bank of England decision will be announced this Thursday, on 14 December. 

One-year fixed savings rates are falling

It’s been a year of highs for savings - particularly one-year savings rates, which reached heights of 6.2% with NS&I’s one-year fixed bond back in August - as a result of a string of base rate hikes. 

But, as we headed into the winter months, the savings scene hit a rock: MoneyWeek research shows there have been no rate increases on one-year fixed savings since 9 October 2023. 

And in the past week alone, seven lenders have either cut rates or pulled their one-year fixed deals. 

Işbank has cut its one-year savings rate by the biggest amount - trimming 0.65 points off its 5.65% deal. 

The freezing of interest rates for the second time in a row could be held accountable for the rate drops, as Sarah Coles from Hargreaves Lansdown explains: “It may seem odd that a pause in rate hikes has caused savings rates to fall, but this is about rate expectations. 

“The Bank’s decision to hold, and comments indicating it felt inflation was suitably under control, convinced more people that rate rises were less likely, and that’s being priced into savings.”

Whilst rates have been falling, inflation also fell sharply last month to 4.6%, which means hundreds of savings accounts now beat the cost of living - more of a reason to act fast to bag the best savings products, before rates dip further.  

What can I earn on a one-year fixed savings account now? 

Now that Metro Bank has fallen off the top spot, the best rate you can earn on a one-year fixed product is 5.7% with Union Bank of India. These are the next best rates:  

• Earn 5.7% (expected profit rate) with Al Rayan Bank’s one year fixed saver. 
• Metro Bank’s new 5.66% AER one-year fixed saver.
• Also, earn 5.66% AER with SmartSave’s one-year fixed saver. 

Will interest rates fall? 

The Bank of England (BoE) will announce what will happen to the base rate this Thursday, on 14 December. 

Due to inflation falling, it has taken the pressure off the BoE to hike interest rates, and now talk is turning to when it will start to cut rates. 

Most experts believe interest rates will be held again at 5.25% at the next meeting. 

Sarah Coles says: “We don’t expect a massive step change in savings rates until the market starts to expect rate cuts are imminent, so there are still some great rates around for anyone who is considering a fix.”

But she warns that these attractive rates are “not going to last forever, so it’s worth acting sooner rather than later”.

Some economists believe the first interest rate cut by the Bank of England will happen in the first half of 2024, while others think it will occur later in the year.