Top one-year fixed bonds now pay 1.5 pc

The Bank of england has launched a scheme to help banks borrow money at rock-bottom rates — signalling that savers should expect grim years ahead.

The new Term Funding Scheme, which launches next month and lasts for four years, is supposed to make sure lenders pass on the full 0.25 percentage point base rate cut to borrowers. That spells bad news for savers, as banks won’t need to launch tempting deals to lure money from new savers.

The amount banks can borrow from the fund could reach £100billion — double the total savers added to their accounts in the past 12 months.

Fixed-rate bond deals have plummeted since the beginning of the month when the Bank of england cut base rate from 0.5 pc to 0.25 pc and announced its new scheme. The most you can earn on a oneyear fixed-rate bond is 1.5pc from United Trust Bank (£150 interest per £10,000 savings).

The best high Street deal is with hinckley & Rugby BS at 1.35 pc or Co-operative Bank at 1.2 pc. You earn very little more if you tie up your money for two years. Shawbrook Bank pays 1.7 pc (£170 a year on each £10,000). Top deals on the high Street include 1.35pc from Co-operative Bank or Leeds Building Society’s 1.25pc.

Cash Isa rates are even worse. The top one-year rate is 1.3 pc online from Shawbrook Bank or 1.15pc from high Street branches of Metro Bank and Leeds BS.

Shawbrook Bank pays 1.4 pc for two years, Metro Bank 1.3 pc and Leeds BS 1.25 pc. sy.morris@dailymail.co.uk