Savers offered best returns in years as fixed rates soar

Savers have many competitive deals to choose from despite the number of cash ISAs falling.

In a positive move for the savings market, fixed rates continued to rise at the start of June, the most recent Moneyfacts UK Savings Trends Treasury Report has shown.

Encouragingly, at the beginning of the month the average one-year fixed savings account paid 4.19%, its highest rate since April last year, while those looking to lock in a longer-term fixed rate will find average returns on savings accounts with terms over 550 days have jumped to 4.21%, their highest since January 2024.

What’s more, those looking for tax-free savings will be pleased to see returns on fixed ISAs continued to trend upwards and outpace their non-ISA counterparts, with the average one-year rate increasing to 4.25% and the average longer-term rates leaping to 4.22%. This brings them to their highest levels since September 2024 and January 2024, respectively, and means “savers are no longer having to compromise between competitive returns and tax-efficiency”, according to Caitlyn Eastell, Personal Finance Analyst at Moneyfactscompare.co.uk.

Eastell explained that these highs “may be expected, particularly when base rate is likely to remain higher for longer, encouraging providers to offer more competitive returns to attract longer-term deposits”. This is partly due to expectations for inflation to rise following recent geopolitical events.

However, Eastell cautioned securing a fixed rate could be a “double edged sword,” as it comes at the sacrifice of flexibility.

“Savers should consider reviewing their full savings pot and keep some cash in easy reach for emergencies before locking away,” she added.

Is the cash ISA market cooling?

Following months of growth, “the cash ISA market is showing signs of cooling”,  Eastell commented.

“Average variable cash ISA rates fell for the first time since February, with the number of cash ISAs also dropping for the first time since November 2025,” she continued.

With ISA season over, providers may be feeling less pressure to compete for deposits, which Eastell said could see less attractive variable ISA rates begin to appear on the market. This is why it remains important for savers to actively shop around for competitive returns if they find their accounts lagging.

Alternatively, savings accounts also offer great opportunities for consumers to maximise their returns. Despite the overall number of cash ISAs falling, product choice (including ISAs and non-ISAs) rose to a staggering 2,560 deals at the beginning of June – its highest on record. This means savers continue to have plenty of competitive deals beating base rate to choose from.

“With the highest number of savings accounts ever recorded, more than half are paying above base rate, and competition is still intensifying. Savers who remain loyal to older accounts risk falling behind the market’s best deals and may even see their real returns eroded by inflation,” Eastell warned.

Once again, regularly reviewing and switching your accounts is vital to ensure you’re receiving the best return on your hard-earned money.