The best one-year fixed rate has seen the largest cut in nine months – down from 5.05 per cent in September last year to 4.7 per cent now – whilst many other market-leading bonds have also been reduced, according to Moneyfactscompare.co.uk.
It comes as the base rate has been cut to 4.25 per cent with expectations that it will be cut once more again this year. As savings rates often fall in line with interest rates, providers have been reducing their returns.
However, should they choose to lock their money away for a set amount of time, they could maximise their returns.
She said: “This is well over double the interest earned from the market-leader in June 2020, at just £933.
“It is imperative that during a period of harsh reductions, savers take the time to carefully review any deals they are considering and seek independent advice if needed.”
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Such rates may be better suited to medium and long-term savers who can afford to set their cash aside.
Myron Jobson, senior personal finance analyst at interactive investor, said with further cuts to interest rates being a question of when, not if, the best savings rates are on “borrowed time”.
“There is no substitute for shopping around to find the best savings rates.
“Consider how long you can afford to keep your money in savings. Research the various options, compare rates and select one that aligns with your needs.”
Sarah Coles, head of personal finance at Hargreaves Lansdown, said the Bank of England’s decision to slash rates by 0.25 per cent in May will have depressed fixed rates, in general, a little, but longer-term rates were holding up.
“Recently, we’ve seen longer-dated fixed terms hold up, because long-term gilt yields have been rising.”
Coles added: “Bonds over the pond set the direction of prices, UK bonds follow in its wake. Of course, the one certainty in the market at the moment is uncertainty. With global politics such an unpredictable beast, it’s vital not to pin your plans on forecasts.
The best savings deals on the market
Currently, the best five-year bond is with Hampshire Trust at 4.46 per cent, with a minimum deposit of £1 and a maximum of £250,000.
If you’re looking for something a little shorter, Habib Bank Zurich has a 4.4 per cent deal, and Tandem a 4.38 per cent one-year fix.
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