Savings rates hit 13-year high with main account earning 4.11%
Savings rates hit a 13-year high after the launch of a new best-buy account paying 4.11pc.
App-only provider Atom Bank has launched a one-year fixed rate bond paying 4.11% – the highest one-year rate since 2009, according to analyst Moneyfacts.
Demand for this account is expected to be huge as savers rush to secure offers before they reach their subscription limits. A one-year Newcastle Building Society bond paying 4.1pc sold off within days last week after a flood of customers opened accounts.
The £20,000 deposit in Atom Bank’s new deal would generate returns of £822 over one year.
Interest rates have risen since last month’s mini-budget. The average one-year bond rate is now 2.68%, the highest since April 2012, according to Moneyfacts.
The best buy rate has risen 0.51 percentage points since Chancellor Kwasi Kwarteng’s announcement, when it was 3.6%, according to Savings Champion, another analyst.
After plans to increase government borrowing were announced, gilt yields soared and banks began passing on higher rates to savers and mortgage borrowers.
During the same week, the Bank of England also raised interest rates by 0.5 percentage points, which also benefited savers. The bank rate is now 2.25%, compared to 0.1% last December.
Anna Bowes of Savings Champion said higher rates were “good news for savers”, although they were still below inflation, which stands at 9.9%.
“With the situation changing all the time, it’s hard to know how far higher rates will go, if at all,” she said. “So if you see a rate that looks attractive, it may be worth grabbing it while you can. All the time you’re waiting for a better rate to arrive, you’re missing out on earning that higher interest.
The sudden rise in market rates means savers have earned more in cash accounts than in the stock market for the first time since 2015.
Rising interest rates have also benefited those with money in premium bonds. National Savings & Investments raised the price rate from 1.4% to 2.2% – the biggest increase since 1980.