Fixed-rate savings rates are on the up
There might be some respite for suffering savers as the average fixed-rate bond rates have started to rise in the last two months, according to new research from moneysupermarket.com.
According to the comparison website, the current average rate for a two-year fixed-rate bond is 3.76% - an increase of 0.09 percentage points since May this year.
However, it's not just two-year fixed-rate bonds that have seen a rise, but the average rate for one, three and four-year fixed-rate bonds have also increased over the last two months.
Kevin Mountford, head of banking at moneysupermarket.com, says: "Despite low interest rates, there is still healthy competition among savings providers. With the recent increase in rates from the likes of Yorkshire Building Society, The Co-operative Bank and The AA, savvy savers need to be quick to take advantage as these rates may not hang around for too long.
"For those who are able to lock their money away for a while, fixed-rate bonds are very appealing and the rates are certainly stronger than the lower levels seen over the past year.
"The average one-year rate on a fixed-rate bond is 0.19% higher than the market-leading easy-access account so even tying up your money for a short period can be worthwhile."
He adds: "Now could not be a more pivotal time for savers to consider their savings rates, as the rising cost of living puts the nation's finances under strain. With the majority of savers sitting on low savings rates, switching accounts could see them enjoy greater returns at a time when banks are fighting for their cash."
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.