Rachel Springall, Finance Expert at Moneyfacts, said:
“The fixed bond market continues to thrive with a healthy injection of competition, particularly amongst challenger banks. All average one-year and longer-term fixed rates across bonds and ISAs have now risen for six months in a row and these returns are notably more than those seen this time last year. This consecutive rate rise phenomenon has not been seen since August 2007, before the financial crash, and demonstrates the steady growth since rates fell to record lows earlier this year.
“Despite a positive climb to fixed ISA rates, they pale in comparison to bond rates and the difference between the two is stark. The average one-year ISA rate pays 0.57% compared to 0.80% on a one-year fixed bond, so those savers adamant to use their ISA allowance as routine would be wise to consider their existing Personal Savings Allowance (PSA), which is £1,000 earned in interest tax-free for basic rate taxpayers and £500 for higher rate taxpayers. In addition, savers will have a fixed allowance that they can invest in an ISA each year.
“While savers may have seen continued improvement to fixed rates, all average variable savings rates remained unchanged month-on-month for the first time since July 2019. This stagnation may be disappointing news considering how savers may well have hoped to see competition enrich the variable rate market, especially on easy access accounts which remain a firm favourite. According to the Bank of England, during October there was an inflow into sight deposits of just over £5 billion, which is £91 billion so far during 2021. However, for time deposits there has been an outflow of around £11 billion this year, and outflows have now occurred for the 11th consecutive month.
“Savers who are pulling their cash out of fixed and storing it within easy access accounts may do so for ease and peace of mind, however, on average easy access accounts pay 0.19% compared to 0.55% on a notice account and 0.80% on a one-year fixed bond – approximately three and four times more interest respectively. Those savers looking to maximise their interest may need to reconsider how vital it is to access their cash instantly moving into 2022.”
Rachel Springall, Finance Expert at Moneyfacts, said:
“The fixed bond market continues to thrive with a healthy injection of competition, particularly amongst challenger banks. All average one-year and longer-term fixed rates across bonds and ISAs have now risen for six months in a row and these returns are notably more than those seen this time last year. This consecutive rate rise phenomenon has not been seen since August 2007, before the financial crash, and demonstrates the steady growth since rates fell to record lows earlier this year.
“Despite a positive climb to fixed ISA rates, they pale in comparison to bond rates and the difference between the two is stark. The average one-year ISA rate pays 0.57% compared to 0.80% on a one-year fixed bond, so those savers adamant to use their ISA allowance as routine would be wise to consider their existing Personal Savings Allowance (PSA), which is £1,000 earned in interest tax-free for basic rate taxpayers and £500 for higher rate taxpayers. In addition, savers will have a fixed allowance that they can invest in an ISA each year.
“While savers may have seen continued improvement to fixed rates, all average variable savings rates remained unchanged month-on-month for the first time since July 2019. This stagnation may be disappointing news considering how savers may well have hoped to see competition enrich the variable rate market, especially on easy access accounts which remain a firm favourite. According to the Bank of England, during October there was an inflow into sight deposits of just over £5 billion, which is £91 billion so far during 2021. However, for time deposits there has been an outflow of around £11 billion this year, and outflows have now occurred for the 11th consecutive month.
“Savers who are pulling their cash out of fixed and storing it within easy access accounts may do so for ease and peace of mind, however, on average easy access accounts pay 0.19% compared to 0.55% on a notice account and 0.80% on a one-year fixed bond – approximately three and four times more interest respectively. Those savers looking to maximise their interest may need to reconsider how vital it is to access their cash instantly moving into 2022.”
