Savers may now want to lock their money into a top long-term savings deal – as Thursday's Bank of England decision to keep the base rate at 5.25 percent signals that some of the best offers could soon be withdrawn.
With inflation now at 4.6 percent – after a peak of 11.1 percent last year – experts believe that the base rate no longer needs to be raised to keep it under control.
Instead, the financial markets predict that the base interest rate could fall next year.
Anna Bowes, co-founder of interest rate controller Savings Champion, says: 'Now certainly seems like the right time to get into a long-term savings deal.
'Currently, short-term one-year deals offer better rates than five-year deals – and this is an indication that the market expects these to fall.'
Locked up: Bank of England's decision to keep base rate at 5.25 percent signals some of the best savings offers could soon be withdrawn
She adds: 'Although you can make more money on the short-term deals, it can be difficult to find such a great offer again when they expire. This is why a long-term deal can often make more money in the end. My advice is to conclude a fixed deal now, before interest rates fall even further.'
The best buy for a five-year fixed rate bond is 5 percent paid by Union Bank of India, according to Savings Champion. This requires a minimum balance of €1,000 to be managed online, by telephone or by post.
Other top-paying five-year bond offers include 4.81 per cent from online bank Raisin on a minimum balance of £2,000, while Buckinghamshire Building Society offers 4.7 per cent on a minimum of £100, with both branch and online banking available.
On a one- or two-year bond, the Union Bank of India pays 5.7 percent interest for a minimum of £1,000.
Adam Thrower, head of savings at Shawbrook, said: 'Given that the Bank of England says it expects inflation to continue to fall into 2024, it's fair to assume that interest rates on savings now could be as good as they'll ever be. to get. So consider transferring your money now, before it's too late.”
Although interest rates are forecast to fall, there is still a sign of caution in the air – as only six members of the Bank of England's monetary policy committee voted to keep interest rates at 5.25 percent – voting the other three for an increase.
Laura Suter, director of personal finance at asset manager AJ Bell, said: 'The base interest rate has been kept at the same level for the third month in a row – and is still at the highest level in fifteen years. And the next announcement from the Bank of England won't be until February because of the Christmas holidays.”
She adds: “Markets are already pricing in a full percentage point rate cut by the end of 2024. However, there could still be some whiplash – with a move either down or up – if there is a change in market sentiment.
'But savers need to act now as we have already seen cuts in savings rates, especially in the fixed interest rate market. And this is a trend that will likely continue in the coming year.”