Savings rates rise to highest level in over a decade

Savings rates rose for the 10th consecutive month for the first time since Moneyfacts records began in February 2007.

After average savings rates fell to record lows in 2021, savers finally have some good news to celebrate as 2022 draws to a close.

A combination of consecutive base rate rises by the Bank of England and increased competition among challenger banks has seen savings rates hit their highest levels in over a decade.

The rate rises can be seen across the savings spectrum, and include significant milestones in the following areas of the market:

• The average easy access rate now stands at 1.43%, its highest point in over 13 years
• The average notice rate is up to 2.26%, the first time it’s breached the 2% mark since December 2008
• At 3.51%, the average one-year fixed bond rate stands at its highest level since December 2008
• The average longer-term fixed bond rate has risen to 3.89%, it’s highest point since January 2010
• The average easy access ISA rate has hit a 10-year high of 1.55%
• The average notice ISA rate has hit 2.19%, the first time it’s passed the 2% mark since November 2012
• The average one-year fixed ISA now stands at 3.30%, with the average longer-term fixed ISA rate reaching 3.67%.

While this general upward trend will be welcomed, the month-on-month rises between the average fixed bond and fixed ISA rates between the start of November and December were more subdued compared to the previous month, demonstrating a more muted attitude among providers re-pricing their deals. This change in momentum could very well see rates move in the opposite direction as we enter 2023, as savings providers reassess their market positions during an unprecedented period of interest rate uncertainty.

If providers cut back their rates, it can lead to other brands being more exposed on the top rate tables, leading to further cuts. So, if you are eyeing a switch, you may want to move swiftly in bagging a better rate.

If you’re more comfortable with a variable rate than a fixed rate bond or ISA, the improvement in this area of the market throughout 2022 will come as welcome news. Average variable rates across easy access, notice and ISA equivalents experienced the biggest month-on-month rises on our records, with the notice account and notice ISA rates breaching 2% for the first time since December 2008.

However, the cost of living crisis is having an impact on savers’ attitudes towards keeping money resting in a flexible pot. According to the Bank of England, there was an outflow of almost £5 billion from interest-bearing sight deposits in October, a clear sign that consumers are pulling money out of flexible accounts, but at the same time, there was demand for fixed accounts recording an inflow of £11.3 billion into time deposits. Moving into 2023, savers and providers alike will need to act quickly to keep on top of the changing market.