Rachel Springall, Finance Expert at Moneyfacts, said:

“As a new tax year looms it is encouraging to see interest rates have improved across Cash ISAs for those savers who still need to utilise their ISA allowance. The savings market overall is going through a buoyant period thanks to a mix of rate competition, base rate rises and the rush of launching enticing offers for savers looking for a deal before the 2023/2024 tax year begins. The average easy access ISA rate rose month-on-month to 2.01% and stands at its highest point since February 2009 (2.02%). Those savers comparing short-term fixed ISAs will also find the average one-year fixed ISA rose to 3.56%, its highest point since December 2008 (4.58%).

“Savers looking beyond ISAs may be pleased to know that all variable rates (easy access, notice and ISA equivalents) rose for the 13th consecutive month, thanks to competition and back-to-back Bank of England base rate rises. It is imperative that consumers take time to check any variable rates they have against the top rates, especially as the average easy access rate is 1.60% higher than a year ago. There will be accounts out there which have not received the full benefits of base rate rises and it is down to savers to compare and switch. Growing choice in the market means it is more important than ever for savers to consider both unfamiliar and household names, as there are now more overall savings deals on the market since October 2022.

“The trend in demand for fixed rates is still evident, as seen over recent months, as is the need for some savers to dip into more flexible pots, according to recent figures published by the Bank of England. There was an outflow of almost £4 billion from interest-bearing sight deposits in January 2023 and demand for fixed accounts recorded an inflow of almost £7 billion into time deposits. Our own data shows the average shelf life of fixed rate bonds stands at 46 days, much longer than seen at the start of the year. Savers will still need to act quickly to take advantage of a top rate, particularly if offered by a challenger bank that reaches its funding targets, as a deal may only be on the shelf for a short period.”