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Savings rates hit 13-year high as top account pays 4.11pc

savings rates accounts
savings rates accounts

Savings rates have reached a 13-year high following the launch of a new best-buy account paying 4.11pc.

App-only provider Atom Bank has launched a one-year fixed-rate bond paying 4.11pc – the highest one-year rate since 2009, according to analyst Moneyfacts.

There is expected to be huge demand for this account as savers rush to secure deals before they reach their subscription limits. A one-year bond from Newcastle Building Society paying 4.1pc sold out in a matter of days last week after a flood of customers opened accounts.

Depositing £20,000 in Atom Bank’s new deal would generate returns of £822 over a year.

Interest rates have risen since the mini-Budget last month. The average rate for one-year bonds is now 2.68pc – the highest since April 2012, according Moneyfacts.

The best-buy rate has risen by 0.51 percentage points since Chancellor Kwasi Kwarteng’s announcement, when it was 3.6pc, according to Savings Champion, another analyst.

After plans to increase government borrowing were announced, gilt yields shot up and banks started to pass on higher rates to both savers and mortgage borrowers.

During the same week the Bank of England also raised interest rates by 0.5 percentage points, which has also benefited savers. The Bank Rate is now 2.25pc, up from 0.1pc last December.

Anna Bowes, of Savings Champion, said higher rates were “good news for savers”, although still lower than inflation, which stands at 9.9pc.

“With the situation changing all the time, it’s difficult to know how much higher rates will go, if at all,” she said. “So if you see a rate that looks attractive, it may be worth grabbing it while you can. All the time you are waiting for a better rate to come along, you are missing out on earning that higher interest.”

The sudden increase in market rates means that savers have earned more from cash accounts than the stock market for the first time since 2015.

Rising interest rates have also benefited those with money in Premium Bonds. National Savings & Investments has increased the prize rate from 1.4pc to 2.2pc – the biggest rise since 1980.