Savers are warned not to rush into fixed rates above 5% as larger accounts could soon disappear

Savers who want to open a fixed-rate savings account that pays more than 5 percent should consider locking in their savings now.

Fixed rates have been falling and now savings experts expect fixed-rate accounts paying more than 5 percent to disappear within a month.

Major fixed-rate agreements have been cut across the board and over varying timeframes.

Analysis by This is Money found that since the base rate was cut to 5 per cent last week, at least 100 savings accounts have seen their rates reduced.

This included reducing the one-year bond of Union Bank of India from 5.4 per cent, which was the market-leading rate, to 5.25 per cent.

Savers can still find fixed-rate deals that pay more than 5 percent, but only in the one-year market; no other fixed-rate term pays more than 5 percent today.

Access Bank had a two-year account with a fixed interest rate of 5.06%, but this has now been reduced to 4.9%. The best two-year account is offered by Birmingham Bank, which pays 4.91%.

> Fixed rate accounts: See This is Money’s independent best buy tables

James Blower, founder of Savings Guru, said: ‘Thursday’s base rate cut caught many providers on the wrong foot and those who were overpaying have quickly adjusted.

‘There are still a handful of one-year fixed rates above 5 percent, but two-year rates above that have already disappeared.

‘There are only 11 suppliers paying more than 5 percent and only two paying more than 5.1 percent. I expect the best deals to fall to just over 5 percent by the end of next week and below that level next month.

“Savers definitely need to act quickly as rates are not going up from now on.”

Should I adopt a fixed savings rate now?

Savings experts predict that the basic rate could be cut again before the end of the year. Given how providers cut savings rates after the last basic rate cut, it seems certain that there will be further falls in savings rates in the coming months and years.

So savers who can lock in their savings for the long term without needing to access them are warned that current five-year fixed savings rates may be the best they will see for a while.

Those who don’t like the idea of ​​locking away their savings for so long could spread them out over a combination of one-year and longer-term installments.

Blower said: “Five-year rates look an excellent option given the outlook, and savers who don’t need access over that period could be well rewarded as I expect five-year rates to fall below 4 per cent by 2025.”

Hagger said: ‘Economic experts are predicting further rate cuts over the next six to 12 months, but beyond that there is little certainty about which direction rates will move and how quickly.

‘A five-year interest rate at 4.51 percent may sound attractive today, but how many people will be happy to sit on their money for half a decade without being able to access it?

‘If you are very conscious of interest rates, why not consider a mix of one-, two- and three-year fixed-rate products?

“If you have some extra cash you can put away for a couple of years, RCI Bank’s two-year deal looks great, but it won’t last long so you’ll have to act quickly.”

Rachel Springall, finance expert at Moneyfacts, said: ‘Savers who are on the fence about whether to invest their cash in a fixed-rate bond may want to do so quickly, as higher rates are not guaranteed to remain in the market for long.

“Those expecting their bonds to mature and still unable to secure a new deal should brace for shock, as rate cuts could be on the horizon. Savers must act now to secure a new deal, or they could be left disappointed.”