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Fixed savings rates rise for six months in a row

Image of a Moneyfacts Savings Treasury Report Image of a Moneyfacts Savings Treasury Report Image of a Moneyfacts Savings Treasury Report
Rachel Springall, Press Officer
Rachel Springall, Press Officer / Finance Expert T: 01603 476210 E: Email Rachel
20/12/2021

Fixed savings rates rise for six months in a row

Fixed savings rates rise for six months in a row

Moneyfacts UK Savings Trends Treasury Report data reveals average fixed rates have risen for six consecutive months, the first time since August 2007, however, all average variable rates were unchanged for the first time since July 2019.

 

Moneyfacts UK Savings Trends Treasury Report data reveals average fixed rates have risen for six consecutive months, the first time since August 2007, however, all average variable rates were unchanged for the first time since July 2019.

 

  • Average fixed rates all rose month-on-month for the sixth consecutive month, the first time this has occurred since August 2007. The average one-year bond is at its highest level since June 2020 when it was 0.86%, and the longer-term fixed bond rate is at its highest level since May 2020 when it stood at 1.18%. Both rates rose for the eighth consecutive month.
  • The one-year and longer-term fixed ISAs rose month-on-month; the one-year ISA is the highest since November 2020 and the longer-term fixed ISA is the highest since May 2020.
  • All variable ISA and non-ISA rates remained unchanged month-on-month. The last time this occurred was in July 2019.
  • ISA product choice improved for an eighth consecutive month, to 388 deals, the highest seen since March 2020 when there 417 deals.
  • Product choice overall rose month-on-month, to 1,646 savings deals (including ISAs).
  • Average fixed rates all rose month-on-month for the sixth consecutive month, the first time this has occurred since August 2007. The average one-year bond is at its highest level since June 2020 when it was 0.86%, and the longer-term fixed bond rate is at its highest level since May 2020 when it stood at 1.18%. Both rates rose for the eighth consecutive month.
  • The one-year and longer-term fixed ISAs rose month-on-month; the one-year ISA is the highest since November 2020 and the longer-term fixed ISA is the highest since May 2020.
  • All variable ISA and non-ISA rates remained unchanged month-on-month. The last time this occurred was in July 2019.
  • ISA product choice improved for an eighth consecutive month, to 388 deals, the highest seen since March 2020 when there 417 deals.
  • Product choice overall rose month-on-month, to 1,646 savings deals (including ISAs).

Savings market analysis – average rates

 

Dec-19

Dec-20

Nov-21

Dec-21

Average easy access rate

0.60%

0.19%

0.19%

0.19%

Average easy access ISA rate

0.87%

0.27%

0.26%

0.26%

Average notice rate

1.05%

0.47%

0.55%

0.55%

Average notice ISA rate

1.14%

0.50%

0.37%

0.37%

Average one-year fixed rate bond

1.23%

0.54%

0.77%

0.80%

Average longer-term fixed rate bond*

1.51%

0.77%

1.06%

1.14%

Average one-year fixed rate ISA

1.17%

0.52%

0.56%

0.57%

Average longer-term fixed rate ISA*

1.37%

0.68%

0.92%

0.96%

*Longer-term fixed bonds or ISAs are those with terms over 550 days. Average interest rates based on a £5,000 deposit as at the start of the month.

Source: Moneyfacts Treasury Reports

 

Savings market analysis – product count

 

Dec-19

Dec-20

Nov-21

Dec-21

Number of live savings account options (excluding ISAs)

1,411

1,164

1,246

1,258

Number of live ISA options

415

350

382

388

Source: Moneyfacts Treasury Reports

 

Savings market analysis – average rates

 

Dec-19

Dec-20

Nov-21

Dec-21

Average easy access rate

0.60%

0.19%

0.19%

0.19%

Average easy access ISA rate

0.87%

0.27%

0.26%

0.26%

Average notice rate

1.05%

0.47%

0.55%

0.55%

Average notice ISA rate

1.14%

0.50%

0.37%

0.37%

Average one-year fixed rate bond

1.23%

0.54%

0.77%

0.80%

Average longer-term fixed rate bond*

1.51%

0.77%

1.06%

1.14%

Average one-year fixed rate ISA

1.17%

0.52%

0.56%

0.57%

Average longer-term fixed rate ISA*

1.37%

0.68%

0.92%

0.96%

*Longer-term fixed bonds or ISAs are those with terms over 550 days. Average interest rates based on a £5,000 deposit as at the start of the month.

Source: Moneyfacts Treasury Reports

 

Savings market analysis – product count

 

Dec-19

Dec-20

Nov-21

Dec-21

Number of live savings account options (excluding ISAs)

1,411

1,164

1,246

1,258

Number of live ISA options

415

350

382

388

Source: Moneyfacts Treasury Reports

 

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.”

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room with ISDN (01603 230551) and Skype (Moneyfacts).

 

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room with ISDN (01603 230551) and Skype (Moneyfacts).

 

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Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert