Grab a fixed savings deal now… rates may already have peaked!

Savers might be wise to get firm deals now, as rates could have peaked, experts say.

In recent months, savers have been faced with the dilemma of whether to repair or wait for better rates to come along.

But the top rate of 4.65 percent seen last week on popular one-year bonds is gone, with some bills on sale for just 24 hours.

And Money Mail may reveal that banks have shelved plans to launch new best-buy bonds as interest rates are not expected to rise as high as once predicted.

At the beginning of this month, the Bank of England’s base rate was tipped to rise to 6 percent next year. Banks responded by pushing interest rates on short-term bonds for new customers above 4.6 percent.

But now money market traders expect base rates to peak at a lower 4.5 percent as inflation is brought under control faster than previously thought.

And that has led to a drop in top payers and suggestion rates have peaked.

Savers no longer have to wait for interest rates to rise, with one-year bonds offering more than 4 percent as good value. That’s three times the top rates of about 1.3 percent offered at the start of the year.

Kevin Mountford, co-founder of savings platform Raisin UK, says: ‘The rises we’ve seen in fixed income bonds have slowed.

Top rates of 4.6 percent or more have all gone. If you see a bond that pays more than 4 percent for a year, grab it.”

Future interest rate developments fell as the Bank of England expects inflation to fall back to its two-year target of 2% from the middle of next year.

It currently stands at a 40-year high of 10.1 percent.

Anna Bowes, from Savings Champion, says: ‘We could be at the peak of rates. Competition on short-term bonds has eased over the past week. But you can still earn about 5 percent on bonds with longer five-year maturities.

“If inflation falls back, as the Bank of England suggests, it seems like a shrewd move to tie up some money at this rate.” There was a buzz at the end of last week when providers lowered rates for new savers.

Virgin cut its one-year rate from 4 percent to just 3.25 percent. Yesterday it withdrew from sale altogether.

Charter Savings Bank’s two-year bond at 4.95 percent was on sale for just one day, while the provider canceled the launch of its one-year bond at 4.55 percent altogether.

RCI Bank cut its one-year rate from 4.6 percent to 4.2 percent and United Trust’s one-year bond of 4.65 percent was on sale for just 24 hours.

Other top rates from Secure Trust, Tandem, Vanquis, Close Brothers Savings and Oxbury banks also disappeared.

The cuts are still coming thick and fast. This morning, the one-year bond of savings giant Halifax plummeted from 3.4 percent to 2.8 percent for new savers, while Leeds BS fell from 3.75 percent to 3.4 percent.

Now it is the competition between providers for savings instead of future interest rate increases that will increase returns.

And those top bonds disappear once the bank or mortgage lender has attracted the money they need.

But with any increases, it is unlikely that rates will be much higher than they are now.

Kent Reliance bucked the trend yesterday by raising its fixed rate bonds for new depositors. The one-year bond pays a top 4.45 percent, against a much lower 2.79 percent.

Along with Kent Reliance’s 4.45 percent, other top one-year fixed-income bonds come from Investec at 4.36 percent, with Aldermore, Atom and TSB at 4.35 percent.

DF Capital pays 4.75 percent for 18 months.

If you’re willing to tie up your money for five years, Tandem offers 5 percent and Ford Money and RCI Bank pay 4.95 percent.

Remember, you can’t get your money out of a fixed rate bond until maturity.

sy.morris@dailymail.co.uk