- Only two providers offer one-year fixed rate accounts that pay more than 6%
- Union Bank of India pays 6.05% and Habib Bank Zurich pays 6.03%
- A savings expert said these rates could be withdrawn on Friday.
The race to get the best-paying one-year fixed-rate account is on, but it may only last a matter of days, according to savings experts.
Only two savings providers now offer a one-year fixed rate account paying more than 6 per cent.
Union Bank of India offers a one-year fixed rate account that pays an interest rate of 6.05 percent and Habib Bank Zurich pays 6.03 percent.
Both banks are covered by the Financial Services Compensation Scheme protection limits of £85,000.
Many providers no longer offer one-year fixed rate accounts above 6%
Experts don’t expect more accounts paying an interest rate of 6 percent or higher to appear in the fixed-rate market.
Union Bank of India cut its rate from 6.11 percent on Friday, in a sign that the only way from here is to go lower for the best one-year fixed rate accounts.
The next best accounts pay 5.95 percent, although they continue to drop day by day.
The one-year fixed rate market fell from a high of 6.2 percent after NS&I withdrew its best-ever one-year bond. Last month, savers could choose from several accounts that paid more than 6 percent.
The appearance of this product on the market severely distorted the one-year bond market, as no other savings provider could beat this interest rate.
We asked savings experts how long they expect the two one-year fixed-rate accounts that pay more than 6 percent interest to last.
James Blower, founder of the website Savings Guru, says: “I would be surprised if these rates last beyond this week.” If the Bank of England keeps the base rate at 5.25 per cent, then they are likely to reduce or withdraw it on Friday, I suppose.
Main corrections of a year
While Union Bank of India and Habib Bank Zurich offer more than 6 per cent fixation for a year, many savers may be put off by unfamiliar names.
However, This is Money independent savings desks are packed with banks that aren’t exactly household names.
Below are the best of the rest:
Gatehouse Bank: 5.9%
Ikano Bank – 5.86%
Al Rayan Bank – 5.85%
Close siblings: 5.85%
National Bank of Egypt – 5.85%
You need to scroll down the table to see more familiar names, such as Coventry Building Society and TSB, both offering 5.5%.
‘Union Bank of India cut its rate on Friday from 6.11 per cent and we think it will have to do so again as the one-year market is broadly declining to around 5.8 per cent to 5.85 per cent.
While Andrew Hagger, founder of personal finance website MoneyComms, says he is more conservative in his estimate of when cap rates will be removed.
He says: ‘I think the days of 6 per cent fixed rate savings accounts will be gone in the next seven to ten days.
It says this is because swap rates are slowly falling, making it no longer commercially viable for providers to offer rates at that level.
The expert advice now is to fix it as quickly as you can if you haven’t already, as it’s just one way for fixed rate savings accounts from here.
Mark Hicks, head of active savings at Hargreaves Lansdown, says: ‘Savings rates have fallen back very slightly in October, but not dramatically, and there are still some really strong deals.
“However, we don’t expect rates to rise from now on, so if you were waiting to see if deals went up before closing them, then it’s worth closing a deal sooner rather than later.”