Savers advised to ‘act quickly’ as latest data reveals interest rates on one-year fixed bonds ‘at new low’

The average interest rate on a one-year fixed bond has fallen to a new low of 0.61%, according to new research from financial data company Moneyfacts.

The return is less than half the 1.28% rate observed by the report's researchers this time last year, while the average one-year fixed ISA rate is also down at 0.58%, falling 0.63% over the past 12 months.

The data provider's latest Treasury Report also suggested that there is now less choice in savings options on the market, with 1,517 deals including ISAs on offer in October - a total of 389 fewer deals available than in the same period last year.

Moneyfacts finance expert, Rachel Springall, said the data firm had seen competition among providers fall in October, "impacting product choice and rates", and advised savers to "act quickly" to secure good returns.

She said: "Clearly, these changes bring to light the necessity for savers to act quickly to take advantage of the top rates as the market remains unpredictable.

"One of the most ignited areas in the savings market was one-year fixed rate bonds, which saw average rates rise for two consecutive months after the record low seen in August. However, the average return has since fallen to a new low of 0.61%, fuelled by numerous top deals experiencing cuts, such as those from challenger banks."

The expert said that the cuts may be linked to attempts to cope with demand, and realigning positions.  

The report also found that growing numbers of consumers have been choosing to put cash into easy-access savers rather than fixed accounts.

Research from the data provider suggested that only 31 of the 168 easy-access savers currently on the market offer an interest rate that beats inflation at 0.5%, however.

Several attractive-rate savings accounts, such as the easy-access Marcus by Goldman Sachs, have stopped taking new customers since the start of the pandemic.

The average interest rate on an average easy access ISA is now 0.31%, down from 0.87% in November 2019.

Springall suggested that savers may see better deals return to the market, but cautioned that market volatility going forward may mean savers need to review their rates more often as "they are changing much more frequently".