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Record-breaking rate hikes to one-year fixed bonds

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
21/06/2022

Record-breaking rate hikes to one-year fixed bonds

Record-breaking rate hikes to one-year fixed bonds

Moneyfacts UK Savings Trends Treasury Report data shows the average one-year fixed bond rate recorded its biggest ever month-on-month rise and stands more than three times higher than in June 2021.

 

Moneyfacts UK Savings Trends Treasury Report data shows the average one-year fixed bond rate recorded its biggest ever month-on-month rise and stands more than three times higher than in June 2021.

 

  • The average one-year fixed bond rate experienced the highest month-on-month rise on our records (starting February 2007), increasing by 0.29% to 1.53% and stands at its highest level since October 2013 (1.53%). The average long-term fixed bond rate rose by 0.29% to 1.97%, the biggest rise since July 2008 and stands at its highest since February 2016 (2.03%).
  • The average one-year fixed ISA now stands at 1.21%, its highest point since November 2019 (1.21%) and had the biggest month-on-month rise seen since August 2011. The average longer-term fixed ISA rate rose to 1.67% and stands at its highest point since March 2016 (1.69%).
  • The average easy access rate rose to 0.46% and stands at its highest point in two years (0.51% in April 2020). The average notice rate rose to 0.94%, the biggest month-on-month rise since August 2007 and the highest rate in two years (0.97% in April 2020).
  • The easy access ISA rate rose month-on-month to 0.52% and stands at its highest point since May 2020 (0.63%). The average notice ISA rate rose to 0.77% and is at its highest since May 2020 (0.89%).
  • Product choice overall has grown by 256 deals year-on-year, to 1,711 savings deals (including ISAs), the highest count in choice since March 2020, and is far beyond the record low count of 1,340 in April 2021. 
  • The average one-year fixed bond rate experienced the highest month-on-month rise on our records (starting February 2007), increasing by 0.29% to 1.53% and stands at its highest level since October 2013 (1.53%). The average long-term fixed bond rate rose by 0.29% to 1.97%, the biggest rise since July 2008 and stands at its highest since February 2016 (2.03%).
  • The average one-year fixed ISA now stands at 1.21%, its highest point since November 2019 (1.21%) and had the biggest month-on-month rise seen since August 2011. The average longer-term fixed ISA rate rose to 1.67% and stands at its highest point since March 2016 (1.69%).
  • The average easy access rate rose to 0.46% and stands at its highest point in two years (0.51% in April 2020). The average notice rate rose to 0.94%, the biggest month-on-month rise since August 2007 and the highest rate in two years (0.97% in April 2020).
  • The easy access ISA rate rose month-on-month to 0.52% and stands at its highest point since May 2020 (0.63%). The average notice ISA rate rose to 0.77% and is at its highest since May 2020 (0.89%).
  • Product choice overall has grown by 256 deals year-on-year, to 1,711 savings deals (including ISAs), the highest count in choice since March 2020, and is far beyond the record low count of 1,340 in April 2021. 

Savings market analysis – average rates

 

Jun-20

Jun-21

May-22

Jun-22

Average easy access rate

0.30%

0.16%

0.39%

0.46%

Average easy access ISA rate

0.45%

0.22%

0.45%

0.52%

Average notice rate

0.69%

0.40%

0.80%

0.94%

Average notice ISA rate

0.69%

0.33%

0.64%

0.77%

Average one-year fixed rate bond

0.86%

0.48%

1.24%

1.53%

Average longer-term fixed rate bond*

1.05%

0.72%

1.68%

1.97%

Average one-year fixed rate ISA

0.75%

0.35%

1.02%

1.21%

Average longer-term fixed rate ISA*

0.93%

0.58%

1.49%

1.67%

*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

 

Jun-20

Jun-21

May-22

Jun-22

Number of live savings account options (excluding ISAs)

1,133

1,118

1,269

1,297

Number of live ISA options

323

337

416

414

Source: Moneyfacts Treasury Reports

Savings market analysis – average rates

 

Jun-20

Jun-21

May-22

Jun-22

Average easy access rate

0.30%

0.16%

0.39%

0.46%

Average easy access ISA rate

0.45%

0.22%

0.45%

0.52%

Average notice rate

0.69%

0.40%

0.80%

0.94%

Average notice ISA rate

0.69%

0.33%

0.64%

0.77%

Average one-year fixed rate bond

0.86%

0.48%

1.24%

1.53%

Average longer-term fixed rate bond*

1.05%

0.72%

1.68%

1.97%

Average one-year fixed rate ISA

0.75%

0.35%

1.02%

1.21%

Average longer-term fixed rate ISA*

0.93%

0.58%

1.49%

1.67%

*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

 

Jun-20

Jun-21

May-22

Jun-22

Number of live savings account options (excluding ISAs)

1,133

1,118

1,269

1,297

Number of live ISA options

323

337

416

414

Source: Moneyfacts Treasury Reports

Rachel Springall, Finance Expert at Moneyfacts, said:

“Fixed rates are rising at an astounding pace and month-on-month we have seen the average one-year fixed bond rate see its biggest monthly rise of 0.29%, breaching its previous record-rise from over ten years ago (0.27% in July 2008). Savers who are looking to secure a guaranteed return over the next year will find a stark difference to short-term fixed returns, with the average one-year bond rate now more than three times higher than recorded in June 2021.

“Challenger banks are securing the most prominent positions within the fixed bond market, with some making consecutive changes to their range during May. This vigorous competition led to a fall in the average fixed rate bond shelf life to 44 days, the lowest recorded since November 2021 (40 days). However, the fixed bond market was not seeing such uplifts to rates back then, as it was slowly recovering from the record low average rates recorded in April 2021. Longer-term fixed bonds also felt notable recovery during May, seeing the biggest month-on-month rise since July 2008 (0.35%) and now have the highest average return seen in over six years. Despite this, savers may not be comfortable investing over the longer term, particularly as the margin between the average one-year and longer-term bond stands at 0.44% and competition is rife on shorter-term options. ISAs are also on the up, but average returns remain higher on fixed bonds.

“The back-to-back Bank of England base rate rises are also making an impact on variable savings rates, but it is the challenger banks and building societies jostling for table-topping positions. The average easy access rate and notice rate stand at their highest levels since April 2020, with notice accounts experiencing their biggest month-on-month rise since August 2007. Easy access accounts are still well-sought after and, according to the Bank of England, during April there was an inflow into sight deposits of just over £2.2 billion, which is £15 billion so far this year. However, for time deposits there was an inflow of around £868 million.

“At a time of notable interest rate rises, and further murmurs of base rate rises to come, savers could find a notice account an appealing choice as they can get a slightly higher return than on an easy access account (the margin between the average easy access and notice rate stands at 0.48%) but avoid locking their cash away as they would with a traditional fixed bond. Due to the volumes of rate re-repricing seen in May, consumers and savings providers alike would be wise to keep a close eye on market movements in the weeks to come as rises could continue to dominate.”

Rachel Springall, Finance Expert at Moneyfacts, said:

“Fixed rates are rising at an astounding pace and month-on-month we have seen the average one-year fixed bond rate see its biggest monthly rise of 0.29%, breaching its previous record-rise from over ten years ago (0.27% in July 2008). Savers who are looking to secure a guaranteed return over the next year will find a stark difference to short-term fixed returns, with the average one-year bond rate now more than three times higher than recorded in June 2021.

“Challenger banks are securing the most prominent positions within the fixed bond market, with some making consecutive changes to their range during May. This vigorous competition led to a fall in the average fixed rate bond shelf life to 44 days, the lowest recorded since November 2021 (40 days). However, the fixed bond market was not seeing such uplifts to rates back then, as it was slowly recovering from the record low average rates recorded in April 2021. Longer-term fixed bonds also felt notable recovery during May, seeing the biggest month-on-month rise since July 2008 (0.35%) and now have the highest average return seen in over six years. Despite this, savers may not be comfortable investing over the longer term, particularly as the margin between the average one-year and longer-term bond stands at 0.44% and competition is rife on shorter-term options. ISAs are also on the up, but average returns remain higher on fixed bonds.

“The back-to-back Bank of England base rate rises are also making an impact on variable savings rates, but it is the challenger banks and building societies jostling for table-topping positions. The average easy access rate and notice rate stand at their highest levels since April 2020, with notice accounts experiencing their biggest month-on-month rise since August 2007. Easy access accounts are still well-sought after and, according to the Bank of England, during April there was an inflow into sight deposits of just over £2.2 billion, which is £15 billion so far this year. However, for time deposits there was an inflow of around £868 million.

“At a time of notable interest rate rises, and further murmurs of base rate rises to come, savers could find a notice account an appealing choice as they can get a slightly higher return than on an easy access account (the margin between the average easy access and notice rate stands at 0.48%) but avoid locking their cash away as they would with a traditional fixed bond. Due to the volumes of rate re-repricing seen in May, consumers and savings providers alike would be wise to keep a close eye on market movements in the weeks to come as rises could continue to dominate.”

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.

 

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.

 

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