Shawbrook Bank launched the best one-year fixed rate bond trade today, paying 5.06%.
It beats SmartSave Bank’s 5.01% deal that previously topped This is Money’s independent Best Buy savings table.
Someone who hides £10,000 in Shawbrook’s account can expect to earn £506 in interest after a year.
Savers opting for Shawbook’s offer will need a minimum of £1,000 to get started.
They can deposit up to £2million, although the Financial Services Compensation Scheme only protects depositors up to £85,000 per person or £170,000 in the case of joint accounts.
This means that deposits over £85,000 will not be automatically protected if Shawbrook fails.
Best offer: Shawbrook today launched a market leading 1 year fixed rate bond paying 5.06% and Isa 1 year fixed rate paying 4.43%.
Savers should also be aware that since this is a fixed rate agreement, they cannot withdraw their money until the end of the 12 month period.
Shawbrook also launched a market-leading one-year cash Isa, paying 4.43%, overtaking NatWest, Paragon and West Bromwich BS at the top of This is Money’s Best Buy Cash Isa chart.
Shawbrook also increased its easy access rate to 3.75% for its easy access account.
– See the best easy access rates here.
The bank has also launched an easy-to-access cash Isa deal paying 3.55%.
Again, this is 0.07 percentage points less than the best buy offered by Cynergy Bank paying 3.62%.
Adam Thrower, head of savings at Shawbrook, urged Britons to be more willing to move their savings around to make the most of the best rates currently on offer.
He said: “Incredibly, almost half of savers have not switched accounts since interest rates started to rise last year.
“The savings market is now livelier than it has been in over a decade, so this should be a real incentive for people to get the most out of their money and switch to a better provider. better paid savings.”
How high will the rates go?
This is the big question for savers right now. Everything will depend on the degree of inflation over the next few months and the willingness of the Bank of England to push the base rate higher in order to bring it back into line.
Although inflation fell to 8.7% in the 12 months to April, it did not decline as much as financial markets had expected.
This has resulted in a widespread belief that we expect further interest rate hikes.
Market interest rate expectations are reflected in swap rates – the rates at which financial companies lend money to each other.
The swap market is pricing in three, possibly four, more rate hikes, to a high of around 5.5%, up from 4.8% at the end of last week.
Independent economic research firm Capital Economics now expects the Bank of England to continue raising the base rate, to a high of 5.25%.
Neil Shearing, group chief economist at Capital Economics, said: “The most troubling aspect of the April inflation data, released on Wednesday, was evidence that price pressures are increasingly being generated at National level.
“As a result, we now expect the Bank of England to raise interest rates further than we previously thought, from 4.50% now to a high of 5.25%.”
This expectation of higher rates for longer means we could see savings rates increase even further from here.
Emma Wall, acting head of active savings at Hargreaves Lansdown, said: “Persistent inflation makes a further rate hike very likely at the next monetary policy committee meeting, but I would be cautious about the outlook ahead. from there.”
James Blower, founder of the savings website, Savings Guru, says it’s almost impossible to call the peak in savings rates right now.
He said: “I thought we saw the peak, but the economic news isn’t getting much better and, if that doesn’t change, it’s possible we could go higher.”
“If you think the economic outlook is going to deteriorate, there’s a chance that rates will go up. If they think we’ve had the worst now, then rates should ease in the coming months.
“Personally, it’s incredibly difficult to predict which direction and I would suggest that if savers are happy with a risk-free return of 5.06%, which by historical standards is excellent, then I would take the rates available now.’
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