Savers warned as longer-term fixed rates dip below 4% for first time in months

Savers looking for longer-term options for their cash will find that average rates have dipped below 4% for the first time since spring 2023.

The average longer-term fixed bond rate (with a term of more than 550 days) on the market fell to 3.99% at the start of September, down from 4.13% in early August, Moneyfacts found. A year ago, savers could typically receive 5.12% on a longer-term bond.

Moneyfacts assumed someone would have a £5,000 deposit when calculating rates and took average rates from the first available day of each month. Rachel Springall from Moneyfacts said: "Those looking to lock in for longer will find the average longer-term fixed bond rate dipped below 4% for the first time since April 2023."

The data also shows a decrease in the average long-term fixed Isa rate, now standing at 3.92% starting September, down from 4.08% back in August, and a fall from last September's 5.02%. As for Isas, you would need to go back to May this year, when the rate was last under 4% at 3.89%, as noted by Moneyfacts.

In her overview, Ms Springall mentioned that, generally, both fixed and variable savings rates saw a decline in August. She commented: "The downward path was perhaps an inevitable direction after the Bank of England base rate was cut (from 5.25% to 5%), but it can take a few weeks for providers to make a move in response."

"One area of the savings market to take a hit has been easy access accounts, seeing the biggest month-on-month drop since April 2024. Those savers who have not reviewed their savings accounts would be wise to do so, to ensure they are still paying a competitive return."

The average easy access savings account rate on offer fell from 3.14% in August to 3.07% in September. Ms Springall remarked: "Whichever account savers choose, it is imperative that they explore the more unfamiliar brands, as challenger banks currently pay some of the best rates on the market."

"However, these deals can change quickly, as providers need to react swiftly to any market movements to compete with their peers."