• The average one-year fixed bond rate at 4.02% gross is now 0.11% higher than the average five-year fixed bond at 3.91%. The rate gap was 0.21% a month prior.
• In December 2024, the rate gap between the average one- and five-year bonds was 0.36%, as they sat at 4.19% and 3.83%, respectively.
• A year ago, the average one-year bond paid 4.58%, while the average five-year bond paid 3.95%, a rate gap of 0.63%.

Caitlyn Eastell, Spokesperson at Moneyfactscompare.co.uk, said:

“The best one-year fixed bond has seen the largest cut in nine months and many other market-leading bonds have also been slashed. Providers may have been keeping an eager eye on swap rates since the second cut to base rate this year as they are a helpful tool to ensure that their pricing strategies match the current market conditions. But April’s CPI rose rapidly to 3.5%, its highest in over a year, and with the most competitive deals paying just over 4% this means that savers are earning barely over 1% in real terms.

“It is positive to see a more traditional savings market make a comeback as long-term fixed bonds pay better returns than their short-term counterparts. If savers were to invest £10,000 for five years now, they could earn up to £2,546 by the time their deal matures; this is well over double the interest earned from the market-leader in June 2020, at just £933. While many savers may not be willing to lock away their investments for the long-term, it is a worthwhile consideration as it helps to avoid base rate cuts. It is imperative that during a period of harsh reductions, savers take the time to carefully review any deals they are considering and seek independent advice if needed.”