Rachel Springall, Finance Expert at Moneyfacts, said:

“Savers looking to secure a guaranteed return may be disappointed to see average fixed rates on bonds and Cash ISAs drop to their lowest levels in over a year. However, the margins of cuts month-on-month across one-year and longer-term fixed bond and ISA average rates were lower than the previous month. Fixed bond rates have now fallen for a third consecutive month and more drops could well be on way due to expectations that the Bank of England will cut base rate before the year ends. Despite the rate cuts, product choice remains resilient across the market. The average shelf-life of a fixed rate bond rose to 57 days, up from 51 in September, its highest level since March 2022.

“Those savers coming to the end of their fixed deal will find average rates are more than 1% lower across one-year and longer-term fixed bond and Cash ISAs than a year ago. In comparison to six months ago, those savers who secured a one-year fixed bond or Cash ISA will find average rates were 0.29% and 0.33% higher respectively. There continues to be a rate discrepancy between fixed bonds and ISAs, but with rates on fixed bonds much higher than years gone by, there will be savers out there who could breach their personal savings allowance (PSA) with a bond, particularly if they are a higher rate taxpayer. Cash ISAs are therefore a solid choice due to their tax-free wrapper, so it’s worth exploring all savings account options before investing.

“As we draw nearer to the end of the year, now is a crucial time for savers to review their existing portfolio. Variable rates have not been immune to rate cuts over the past few months, so savers should proactively move their pots if they are getting a poor return on their hard-earned cash. Savers need to stay vigilant as providers will no doubt be assessing their market positions over the coming weeks and will be eyeing up the upcoming Budget to see how this may impact future rate expectations.”