Two base rate cuts in one month would normally send us into despair. With the base rate now at just 0.10% - its lowest ever level - we expected to see rates plummet. And while we have certainly seen some of the on-sale account rates dropping, we are yet to see the same of the closed, off-sale accounts.
To be honest, we’re expecting to see a torrent of cuts to existing savings accounts in the coming weeks – this normally happens during the month following a base rate cut, so these changes are just around the corner.
But what we didn’t expect was a battle of fixed rate bond best tables, in particular the 12-month bonds.
In the immediate aftermath of the first base rate cut on 11th March, a flurry of activity saw many fixed rate bonds immediately withdrawn and often replaced with lower issues, if at all. In fact, over 60 providers withdrew over 320 fixed term bonds and cash ISA accounts in just the first two weeks following the first base rate cut – some of which were best buys. This has seen the average fixed term bond rate fall from 1.24% at the beginning of March, to 1.10% today – a drop of more than 11%.
But the story is very different when you take a look at the very top of the best buy tables. At the end of February, before the base rate dropped, the top five 12-month fixed rate bonds paid an average of 1.58%.
Today, the average is only marginally lower, at 1.56% AER.
It all started immediately after the base rate cut from 0.75% to 0.25%. While a couple of the best buys were withdrawn, over the last couple of weeks several providers have increased the rates paid on their new issues. Smart Save was the first – launching a new higher paying bond on 12th March paying 1.56% - which went straight to the top of the table. It reigned for just a week though, as OakNorth pipped it by offering a bond paying 1.57%.
Secure Trust Bank was next, launching a bond paying 1.58% which was swiftly knocked off its perch by Vanquis Bank, which came in paying 1.60% - followed by BLME and Hampshire Trust Bank. Vanquis and BLME are still paying the highest-paying 12-month bond rate of 1.60%.
For more information on the very best rates available see our fixed rate bond best buy tables. It's worth noting that some of the very best rates aren’t hanging around for long, so if you do want to take advantage to try and weather the storm, you may want to act now.