- Only two providers offer one-year fixed rate accounts that pay more than 6%
- Union Bank of India pays 6.05% and Habib Bank Zurich pays 6.03%
- A savings expert said these interest rates could be withdrawn as early as Friday
The race for a top-paying one-year fixed-rate account is on, but savings experts say it could only last a matter of days.
Now only two savings providers offer a one-year fixed-rate account that pays more than 6 percent.
Union Bank of India offers a one-year fixed rate account with an interest rate of 6.05 percent Habib Bank Zurich pays 6.03 percent.
Both banks are subject to the Financial Services Compensation Scheme protection limits of £85,000.
Many providers no longer offer annual subscriptions with a fixed interest rate above 6%
Experts don’t expect any more accounts paying interest of 6 percent or more to appear before the fixed-rate market arrives.
Union Bank of India cut interest rates from 6.11 percent on Friday, signaling that the only way down from here is for the best one-year fixed rate accounts.
The next best accounts pay 5.95 percent, although these continue to drop by the day.
The one-year fixed rate market fell from a high of 6.2 per cent after NS&I withdrew its best-ever one-year bond. Last month, savers could choose from a number of accounts that paid more than 6 percent.
The appearance of this product on the market seriously disrupted the one-year bond market, as no other savings provider could beat this pace.
We asked savings experts how long they expect the two one-year fixed-rate accounts, which pay interest above 6 percent, to last.
James Blower, founder of the website Savings Guru, said: ‘I would be surprised if these interest rates continue beyond this week. If the Bank of England keeps the base rate at 5.25 percent, I expect it will probably be cut or withdrawn on Friday
‘Union Bank of India on Friday cut its interest rate from 6.11 per cent and we think they will have to do so again as the one-year market generally shifts lower to around 5.8 per cent to 5.85 per cent.
While Andrew Hagger, founder of personal finance website MoneyComms, says he is more conservative in his estimate of when the top rates will be withdrawn.
He says, “I think the days of 6 percent fixed interest savings accounts will be over within the next seven to 10 days.
He says this is because swap rates are slowly falling and it is no longer commercially feasible for providers to offer rates at that level.
The expert advice now is to get it sorted as soon as possible if you haven’t already, as this is only one way from here for fixed rate savings accounts.
Mark Hicks, head of active savings at Hargreaves Lansdown, said: ‘Savings rates fell very slightly in October, but not dramatically, and there are still some very strong deals on offer.
‘However, we don’t expect rates to rise from here on out, so if you were waiting to see if deals went higher before doing a deal, then it’s worth getting a deal as early as possible.’