- Nearly two out of five savers have moved cash from instant access or notice to fixed rates in the past three months with a third of them switching £10,000 or more
- One-year fixed rates are the top choice for savers switching cash
Savers are increasingly switching cash to fixed rate savings accounts from instant access and notice accounts in the expectation of more Bank of England base rate cuts, new research(1) from Investec Save shows.
The Bank of England Monetary Policy Committee(2) has cut the base rate three times from its recent peak of 5.25% to 4.5% starting in August last year with further cuts in November 2024 and February this year.
Investec Save’s research shows savers are responding by moving money into fixed-rate accounts with 37% of people questioned saying they had moved money in the past three months. Around a third (31%) of them say they have moved more than £10,000 out of instant access and notice accounts with 16% saying they have moved between £5,000 and £10,000.
More than half (54%) who have switched have chosen one-year fixed rate accounts while 29% have opted for two-year fixed rate accounts. Around seven per cent chose three-year fixed rate accounts.
The study indicates the switch to fixed rate accounts is likely to continue to gather momentum – around 36% questioned say the intend to move money out of instant access and notice accounts over the next six months with another 35% undecided about whether to move any money.
More than a quarter (27%) of those confidently planning to switch say they will move sums of £10,000 or more while 20% say they will move between £5,000 and £10,000. The most popular choice of fixed rate account to move to among those surveyed is the one-year term chosen by 47% followed by 29% opting for two-year terms and 10% for three-year terms.
David Hunt, Head of Retail Savings at Investec Save, said: “Savers are opting to lock in higher rates with fixed rate accounts and clearly seem to believe there will be more Bank of England base rate cuts throughout the year.
“It is the sensible choice as long as savers do not need access to their cash for a year or more, but it can be an issue if people change their minds. That is why it is advisable – where possible – to have a range of accounts for different needs, including instant access and notice accounts which pay a higher rate than instant access but enable savers to access their money more quickly than when it’s saved in fixed rate accounts.”
Investec Save offers a range of accounts, which do not have any penalty fees or hidden bonus rates, including its Fixed Rate Saver with 1-Year, 2-Year or 3-Year terms available, which all currently offer 4.35% AER/gross. The Fixed Rate Saver provides simplicity and security for savers. Interest is paid on maturity of the 1-Year term and annually on the 2-Year and 3-Year terms. No withdrawals are permitted until the end of the term in each case and no further deposits can be made after the first seven days.
The Online Flexi Saver, which currently offers 4.20% AER (4.12% gross), is a simple and secure instant access savings account, providing instant access to savings. Unlimited deposits are allowed and withdrawals are made to a linked current account. This makes the Online Flexi Saver perfect for unexpected bills that might arise, such as car maintenance or a vet’s bill.
Investec Save’s 90-Day Notice Saver, which offers 4.64% AER (4.54% gross), gives savers a higher rate of interest than the instant access account and there’s no fixed term. Clients are able to save as well as access money to pay for bills they know are coming up, as they can utilise their savings at any time with unlimited withdrawals as long as they have provided 90 days’ notice before withdrawal.
For more information on Investec Save products, visit: https://savings.investec.com/
*AER stands for the Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once a year. The AER is intended to be an indicative rate to help you compare the return on different savings products.
