The debate on whether or not to lock into long-term savings deals just got a little more interesting. Generally speaking, the best rates are available at the end of March and beginning of April as the end of the tax year forces people into thinking about their finances and banks will happily compete for cash. However, this time around, it could pay for savers to wait until later in the year.
The general view was that rates would peak around now. This was because the Bank of England base rate was also expected to be at its peak. Last month’s rise to 4.25 per cent could be the last before we see cuts from next year, according to Samuel Tombs at Pantheon Economics. If banks think the same then savings rates would normally peter out soon. Savings deals are following this line, and rates have crept up, but the sharp increases have plateaued. Average one-year accounts currently pay 3.84 per cent, 0.23 percentage points more than at the start of February. Two-year accounts pay not a lot more, and five-year deals pay 4.03 per cent on average, actually 0.01 percentage points less than two months ago, according to Moneyfacts.
Nonetheless, there’s still good reason to believe that holding off could bag you a more lucrative deal. This is because of a myriad of factors including what savers are doing, National Savings & Investments (NS&I) and historical trends.