Top savings rates start to disappear as calm returns

Savers are being urged to grab deals with high rates before they disappear as market chaos cools.

Experts have warned that rates on savings bonds could be peaking, with many of the most attractive deals taken off the market after they became oversubscribed.

Returns on fixed-rate bonds soared after the mini-Budget, reflecting a jump in yields on government bonds known as gilts. But since Liz Truss’s resignation as prime minister and Chancellor Jeremy Hunt’s reversal of her tax cuts, gilt yields have fallen and are now lower than they were earlier in the month.

This could reduce savings rates offered by banks, said Kay Neufeld of the Centre for Business & Economics Research, a think tank.

“If the interest rates on gilts fall, the margin for banks gets smaller and they then eventually have to reduce the interest rates that they offer on savings bonds,” he said.

The top rates on some bonds have already declined after banks withdrew those with the best rates because they became oversubscribed.

In the days following the miniBudget, disappearing deals were quickly being replaced by new ones at even higher rates. But there are now signs that this is starting to slow down as market chaos cools.

The highest rate on a one-year bond was 4.75pc on Tuesday but had dropped to 4.6pc on Friday, according to Defaqto, an analyst.

The 4.75pc bond was available to savers for only two hours before it became oversubscribed. A second bond launched at the same rate later in the day disappeared in a matter of hours, according to Savings Champion, another analyst.

The top rate on a two-year bond was 4.77pc on Friday, down from 5pc on Wednesday, Defaqto said.

Anna Bowes of Savings Champion said: “We could see rates peaking. These really good deals have come and gone quickly, and now we have seen that there have been some that are no longer as high as they were earlier in the week.

“If you see a fixed-rate bond and you’re happy with the return it’s going to give you, you probably want to get on it.”

Katie Brain of Defaqto said that if savers spotted a bond that offered a high rate, they “may want to act quickly, as it may not be around for long”.