• The average one-year fixed bond at 4.64% gross is now 0.66% higher than the top five-year fixed bond of 3.98%, as of 1 July 2024.
• In January 2024, the rate gap between the average one- and five-year bonds was 0.67%, as they sat at 4.87% and 4.20%, respectively.
• A year ago, the average one-year bond paid 4.80%, with the average five-year bond paying 4.44%, a gap of 0.36%.

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

“The rise and falls of fixed bond rates have been evident over the past couple of years, making it a challenging environment for savers unsure whether to lock their cash into a deal or for how long. The top rates are largely offered by challenger banks who strive to draw in deposits to fund their future lending. Such competition and brand variety makes it an interesting space for consumers comparing deals, but this also means savers need to be quick off the mark to secure a top rate before institutions meet their deposit targets. However, just because the top rates move, does not necessarily mean the whole market is moving in a similar trajectory, so savers need to compare deals carefully.

“Since the start of 2024, the top fixed bond rates have come down, and are significantly lower than they were a year ago, but this should not deter savers from taking advantage of the rates currently available. There are expectations for interest rates to fall in the coming months and that could impact fixed bond rates, so securing a deal now may be wise. Month-on-month the top one- and two-year fixed bond rates are up, while longer-term versions have remained steady. The top one-year fixed bond currently pays 0.30% more than the top five-year bond, however, there may be more appetite to secure a longer-term deal now than at the start of the year when the top five-year bond paid 0.75% less than the top one-year bond.

“Fixed rate bonds are an ideal choice for savers looking for a guaranteed a return on their investment, whether that be for a year or more. However, not every saver may be prepared to lock away their cash over the longer-term. It will be interesting to see how rates will fluctuate in the coming months.”