Have fixed-rate savings accounts now peaked and should you act fast to get a top deal?

Rates on fixed savings deals are starting to fall and experts now believe they have peaked. 

Fixed rates are easing back, with SmartSave’s 6.01 per cent one-year fix the only 12 month deal to now offer a rate beyond 6 per cent – and that requires £10,000 to open.

That comes after a handful of providers had short-term deals offering interest beyond 6 per cent, with one-year deals peaking at 6.1 per cent a few weeks ago.

Rising interest rates means savers are being offered the best returns in years – and with the base rate widely expected to continue to rise and peak between 5.75 per cent and 6 per cent, would savers be wise to lock their money away now?

Locked in: Savers willing to lock in their savings for a year could bag a 6% return on savings held in the best one year fixed rate account 

James Blower, founder of website Savings Guru believes fixed rates have peaked and are already falling back.

He says: ‘With more rates falling than rising, this could be a good time to lock in to some very attractive rates.’

Andrew Hagger, personal finance expert and founder of website MoneyComms agrees. He says: ‘It appears fixed-rates – both bonds and Isas – have peaked and are starting to fall back slightly on the back of recent inflation figures.

‘If you have some spare cash you can lock away, now is a sensible time to consider fixing your rate – even if it is just for a year or two.’

But, he warns: ‘With rates soaring in the last 12 months there’s a danger that people may exceed their personal savings allowance personal savings allowance limit, so if you’re in that boat then an Isa is a better bet as you can shelter £20,000 from the tax man this current tax year.’

Experts agree that rates on fixed accounts peaking and now falling does not necessarily signal a falling rate environment for other types of accounts, such as easy-access.

Hagger says: ‘Easy-access accounts may fall back too eventually, but there’s potentially another rate rise due before we definitely reach a plateau on the current base rate rise cycle – much now depends on the next inflation numbers which are released on 20 September.

Blower adds: ‘Easy-access accounts will continue to rise if the base rate goes to 5.75 per cent or 6 per cent. If this happens, you can expect rates on these accounts to go a little north of 5 per cent up to 5.25 per cent.’

The current best buy easy-access account is offered by Furness Building society with a rate of 5 per cent.

What are the best fixed-rates on offer?

Charter Savings Bank pays 5.65 per cent on its 9 months fixed-rate account. While Hargreaves Lansdown has a rate of 5.55 per cent on a six months fixed-rate account. These are the best short term fixed rates.

The best buy one year fixed-rate account is SmartSave’s 1 year fixed-rate account, offering 6.01 per cent.

The minimum deposit for this account is £10,000. 

A saver putting the minimum deposit of £10,000 away for a year in this account would amass a sum of £10,600.10 in a year.

When it comes to two year fixes, Ford Money’s 6.05 per cent offering and Hampshire Trust Bank, also at 6.05 per cent, lead the way.

Recognise Bank’s 6.05 per cent tops the three year fixed-rate accounts ahead of RCI Bank’s 6 per cent three year fixed-rate account.

While Hampshire Trust Bank’s 5.85 per cent tops four year and RCI’s 5.8 per cent on five year is the best buy.

When it comes to fixed-rate Isas, UBL Bank leads the way with a best buy of 5.77 per cent on its one and two year Isas.

Zopa offers 5.56 per cent on a three year Isa and 5.26 per cent on a five year fixed-rate Isa account.

What’s in the fine print?

Fixed-rate savings accounts offer a set amount of interest on your money over a set length of time – known as the ‘term’. You will know exactly how much interest you will accrue with an account like this.

If you can afford to lock your money away for a set amount of time, fixed-rate accounts can offer some attractive interest rates.

Your provider can’t change the interest rate during the term and in exchange you will usually not be able to withdraw your money until the end of the term on the account, so you need to be sure that you don’t need it in that time. 

This post first appeared on Dailymail.co.uk