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08 Mar 2017

Rate increases on fixed-rate bonds bring small hope to savers

Savers have finally received some positive news as newer banks increase their rates on fixed-rate bonds, This Is Money reports.

While the increases are only small, they are higher than at any time during the past ten months, which is likely to come as welcome news.

Atom Bank has pushed up its deals and now pays 2% for one year, while high street building societies such as Principality and Yorkshire BS have raised theirs by a respective 1.05% and 1%.

Next month, National Savings & Investment´s three-year bond is expected to reach a rate of 2.2% on savings of £3,000 - but more will be revealed during the Budget announcement on 8 March.

As This Is Money notes, larger banks still refuse to increase their poor rates. Unlike these big institutions, newer banks are looking to attract money from savers to fund their lending and growth; as such, they pay the highest rates in order to get savers´ attention.

According to predictions from City experts, rates are likely to stay at rock-bottom levels for another two years. As Moneyfacts analyst Charlotte Nelson explains, this could all be “very short-lived.”

“The absence of larger providers joining in with the rate rises means it is unlikely the whole market will improve any time soon. Savers looking for a fixed rate would be wise to act sooner rather than later,” she advised.

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