🔔 Competition rife amongst short-term fixed rates

Author: Dan Darragh
09th November 2018

Competition in the one year fixed rate bond table is still going strong, with plenty of leapfrogging between providers evident

Competition in one year fixed rate bonds is still going strong

An area of the savings market which is showing plenty of life at the moment is the one year fixed rate bond category, seemingly a popular option for savers and providers alike – as evidenced by the number of changes we are seeing at the moment.

With many savers not looking to commit to be tied in to an account for the longer term amid political and economic uncertainty – and the ongoing question of the terms of our ‘Brexit’ – one year bonds seem to be a popular option.

This move away from longer term fixed rates is apparent when you look at five year fixed rate bonds, for example, where the average of the top five best buys has been dropping since the end of September – going from 2.68% to just 2.60% in that time. Evidence of a lack of demand from savers and indeed popularity with the providers themselves.

In contrast, we have seen the one year bond top five average remain at 2.01% between the end of September and this week – showing that rates are more likely to stay at a higher level.

Certainly, we receive plenty of requests for more information on one year bonds and lots of you are using our best buy table to find out more information.

The downside of this popularity is that market-leading rates are not always available for long – so you may need to act quickly if you want to take advantage.

Not to dwell too much on things that could have been, a market-leading one year rate from Wyelands Bank was available in August this year for just 6 days – proof enough of the need not to dilly-dally at times.

That said, one account that stands ahead of the pack – and has done so for some time – is the 1 Year Premier Deposit Account from BLME – a sharia compliant fixed term account that pays 2.05% gross/AER*.

>> Read more information on Sharia accounts and how they work.

For the best of the rest, the top rate on offer is 2.02% gross/AER from OakNorth, followed closely by Kent Reliance at 2.01% gross/AER.

Next up are a number of providers that are all paying 2.00% gross/AER – and it's not just the lesser-known providers that feature. Most will have heard of the Ford brand (albeit mainly for the cars) and so Ford Money* could be an option for those who prefer to use a brand they recognise.

Of course, as long as you keep your deposit to £85,000 or less (per person, per banking licence) there is no need to shun a provider that you’ve not heard of, as long as they are fully regulated and part of the UK Financial Services Compensation Scheme (FSCS) or European equivalent. You can rest assured that any accounts that are on our Best Buy Tables fit into these categories.

>> For more information on the FSCS, download our free guide.

So, whether you go for the top one year rate on the market or stick to a brand that you are more familiar with - there are plenty of competitive options to choose from.

If you need any further help with finding the accounts that are most suitable for your needs, please call us on 0800 011 9705 to speak to one of our expert savings specialists.

*We are occasionally paid by some providers if you click through from our Best Buy Tables and open a savings or current account with them. We will never accept a payment that compromises in any way our independent, whole of market approach to providing information on savings products. For clarity we will indicate those companies who remunerate us with an asterisk (*).

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