Fixed rate savers hit as Isas and bonds hit year-low with 'more cuts on the way'

Some average fixed savings rates, where funds must be "locked" away, have plummeted to their lowest in at least a year, according to a financial website.

Moneyfacts reported that the average savings rate for requiring notice before withdrawal was 4.21% at the beginning of this month, marking its lowest since October 2023. The average notice Isa rate also dipped to 4.03%, the lowest since October 2023.

Notice accounts typically offer higher returns than easy access accounts, which permit immediate withdrawals. At the start of October, the average easy access rate stood at 3.07%, while the average easy access Isa rate was 3.28%.

The average one-year fixed bond rate dropped to 4.31% at the beginning of October, its nadir since June 2023. The average longer-term fixed bond descended to 3.93%, the lowest since March 2023, with longer-term accounts defined as those exceeding 550 days.

The average one-year fixed Isa rate decreased to 4.18%, its lowest since June 2023, and the average longer-term fixed Isa sank to 3.88%, the lowest since April 2023. Finance expert Rachel Springall from Moneyfacts said: "Savers looking to secure a guaranteed return may be disappointed to see average fixed rates on bonds and cash Isas drop to their lowest levels in over a year."

She further warned: "More drops could well be on the way due to expectations that the Bank of England will cut base rate before the year ends."

"Despite the rate cuts, product choice remains resilient across the market. The average shelf-life of a fixed-rate bond rose to 57 days, up from 51 in September, its highest level since March 2022," she explained. "As we draw nearer to the end of the year, now is a crucial time for savers to review their existing portfolio."

She added: "Variable rates have not been immune to rate cuts over the past few months, so savers should proactively move their pots if they are getting a poor return on their hard-earned cash."

She also warned: "Savers need to stay vigilant as providers will no doubt be assessing their market positions over the coming weeks and will be eyeing up the upcoming to see how this may impact future rate expectations."

Moneyfacts based its analysis on the assumption that someone would have a £5,000 savings deposit, with average rates taken from the first available day of each month.