• The average one-year fixed bond at 4.63% gross is now 0.71% higher than the top five-year fixed bond at 3.92%, as of 1 August 2024. The rate gap was 0.66% a month prior.
• In February 2024, the rate gap between the average one- and five-year bonds was 0.74%, as they sat at 4.62% and 3.88%, respectively.
• A year ago, the average one-year bond paid 5.21%, with the average five-year bond paying 4.77%, a gap of 0.44%.

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:

“Savers sitting on the fence to invest their cash with a fixed rate bond may wish to do so quickly, as the top rates are not guaranteed to sit on the shelf for long. Those waiting for their bond to mature and cannot yet grab a new deal would be wise to brace for impact as rate cuts could be on the horizon. The Bank of England base rate cut is expected to slowly trickle through the savings market over the coming weeks and, while this typically impacts variable rates, the consequences can also lower interest rates on accounts that guarantee returns, like fixed bonds. The top fixed bond rate tables show stagnation across those with the longest terms month-on-month, so these deals which hold a firm place may well have cuts on the horizon.

“Challenger banks are still holding the top rate positions in the market, with one-year bonds proving popular for those brands looking to draw in deposits to fund their future lending. However, any cuts can have a rippling effect, as providers quickly move to adjust their market positions; it’s all in the margins. In a traditional market, savers would be encouraged to invest their cash for longer to get a higher guaranteed return, but this has not been the case now for over two years, where a top five-year bond previously paid more than a one-year bond. There may be presumptions among some savers that competition is lacking across fixed rate bonds, but that would be untrue. There have indeed been brands readjusting their position in the market to better manage the flow of funds or in a reaction to their peers dropping rates, but in contrast there are also brands very keen to grab the spotlight to draw in deposits. Savers need to act now to grab a new deal, or they could be left disappointed.”