Savers warned that loyalty may not pay as some bond rates slide

Savers who stay loyal to their providers could potentially risk missing out on the most competitive returns as some rates dip, a financial information website is warning.

The average one-year fixed bond rate on the market was 3.99% at the start of October, while the top rate paid 4.45%, according to analysis by Moneyfactscompare.co.uk.

A year ago, the top one-year fixed bond rate was 4.95% and the average rate was 4.30%.

The average three-year bond in early October was 3.92%, having edged down from 3.93% a year earlier. The top three-year fix in early October was 4.45%, down from 4.72% in October 2024.

Five-year bonds have remained more steady over the past year.

The top five-year fix on the market in early October was 4.64% – unchanged from the top rate a year ago.

The average five-year rate on the market in early October was 3.96% – which is higher than a year ago at 3.81%.

Average interest rates were based on a £10,000 deposit as at the start of the month.

The change over the past year in the top one-year bond means that, for example, a year ago, someone with £10,000 to put away for a year could have earned £495 on their pot, but now with the top rate they would get £50 less, at £445.

Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “Inflation remains a significant burden which makes it harder for savings to generate real returns. It’s crucial that savers are proactively searching for the most competitive deals, especially if they pay below 3.8% (as the rate of Consumer Prices Index inflation in August was 3.8%).

“Loyalty is not always rewarded, and savers could be missing out on a significant cash bonus.”

Ms Eastell added: “With the future of interest rates still up in the air, some savers may see a greater incentive to lock their cash away for longer.

“Plus, fixed bonds remain a great way to beat base rate cuts.”