Demand among savers for fixed-term deals has surged, bank reports

September 19, 2023 02:25 PM AEST | By PAMEDIA
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The number of fixed-term savings accounts being opened by customers has surged, a major bank has reported.

NatWest said the number of accounts opened in the first half of 2023 was around 17 times the total it recorded in the same period in 2019.

More than 82,000 fixed-term savings accounts were opened in the first half of this year, the bank said.

This compares with 4,700 in the first half of 2019, according to NatWest’s data.

The average age of customers opening fixed-rate savings accounts has edged down from 60 in 2020 to 57 in 2023, NatWest added.

Scotland is among the top areas in the UK for account openings, along with London and the South East of England, the bank said.

But Wales and the North East of England have experienced particularly strong growth in account openings, it added.

NatWest savings expert Lewis Broadie said: “Customers are taking advantage of our increased rates.”

In general, fixed-term savings accounts can give people certainty over how much interest they will earn, in return for locking their money away for a certain period.

Many banks and building societies have increased their savings rates significantly as the Bank of England base rate has been raised. A further base rate increase is expected on Thursday.

A new consumer duty was recently introduced, requiring financial firms to put consumers at the heart of what they do.

The Financial Conduct Authority (FCA) has set out a 14-point action plan to make sure banks and building societies are passing on interest rate rises appropriately to savers, communicating with customers effectively and offering them better deals.

NatWest increased pays 5.56% AER (annual equivalent rate) on a one-year fixed-term account, increasing to 5.60% for balances over £100,000.

Financial information website Moneyfacts said earlier this week that savers looking to lock money into cash Isas or bonds lasting for a year or for the longer term will find average rates have risen above 5% for the first time in nearly 15 years.

Based on someone having a £5,000 deposit, Moneyfacts found that, by early September, the average one-year bond had a rate of 5.34%, while the average one-year fixed-rate cash Isa paid 5.19%.

The average longer-term fixed-rate Isa paid 5.02%, while the average longer-term fixed-rate bond paid 5.12%.

Longer-term accounts were defined by Moneyfacts as those lasting more than 550 days.

This week also marks UK Savings Week (September 18 to 24).


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