Why you should lock into a fixed-rate savings deal now

Lock into a fixed-rate savings deal now following two recent Bank of England base rate cuts in quick succession

Savers should waste no time and look to lock into a fixed-rate deal now. In recent years there has been little point opting for fixed-rate deals because they pay little more than easy-access accounts. 

In fact, over the past 12 months, savers have piled more than £26billion into easy-access deals, while fixed-rate bonds have attracted just £2.2billion. 

But savings rates are falling fast following two recent cuts in quick succession to the Bank of England base rate, which now sits at a historic low of 0.1 per cent. 

Lock it up: Savings rates are falling fast following two recent cuts in quick succession to the Bank of England base rate, which now sits at a historic low of 0.1 per cent

And with another rate cut on the cards, things are only likely to get worse. To move your money into a top fixed deal, you need to act quickly, as there is no knowing how long these fixed rates will last. 

Fixed-rate bonds are typically first in line for rate cuts as providers do not want to be left paying over the odds for the next year or two. 

Accounts have already started disappearing at an alarming rate, with hundreds replaced by similar accounts offering much lower rates. 

Some building societies, including Family, Market Harborough, Dudley and Newcastle, which have consistently offered good rates, have withdrawn their bonds from sale altogether. 

In fact, Market Harborough and Earl Shilton building societies have gone even further and taken the extraordinary step of withdrawing all their savings accounts from sale. 

This will not affect existing customers. Patrick Connolly, of advisers Chase de Vere, says: ‘If you are happy to tie your money up for one or two years, now is the time to lock into these rates. 

‘We are not going to see higher rates any time soon. Easy access rates are likely to fall.’ Savers considering shielding themselves from further imminent cuts can earn 1.57 per cent for one year with OakNorth Bank. 

Hampshire Trust Bank, United Trust Bank and Investec Bank all pay 1.55 per cent and Charter Savings Bank 1.51 per cent. 

For two years, Charter and Hampshire Trust pay 1.63 per cent and United Trust Bank 1.65 per cent. 

Meanwhile, on fixed-rate cash Isas, the rates are lower — with the best one-year rate at 1.36 per cent from Virgin Money. 

Paragon, Shawbrook, Charter Savings Bank and Kent Reliance all pay 1.35 per cent. 

For two years, Hampshire Trust and Charter are both paying 1.46 per cent, with Paragon, Shawbrook and Kent Reliance at 1.45 per cent. 

On taxable easy-access accounts, Marcus at Goldman Sachs still pays 1.3 per cent. But any of these rates could yet change following the latest base rate cuts. 

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