Lloyds Bank has launched a new 13-month fixed term deposit offering business customers a 4.01% interest rate on surplus funds, the bank has announced. The six-week promotional rate is described by the bank as a leading rate for fixed term deposits.
The move follows the Bank of England's decision to increase the Bank Rate from 3.75% to 4%. Business customers can apply for the account until December 17.
Bank governor warns on inflation risks
Bank governor Andrew Bailey warned that the longer the Middle East conflict persists, the greater the risk of inflationary pressures becoming embedded in the economy, potentially requiring further rate increases.
“These increases should not be seen as the first of an inevitable long sequence of hikes. That is not inevitable. But unless the conflict in the Middle East is resolved, neither does it seem likely to be the last increase,” he said.
Key features of the new account
The Lloyds account gives businesses a guaranteed return on cash reserves over 13 months, locking in the interest rate for the full term of the deposit, the bank says. Key features include the interest rate of 4.01% fixed for the full term, up from the previous rate of 2.75%, a term length of 13 months with funds maturing on January 13, 2028, and an availability period open to new deposits until December 17, 2026.
The fixed term deposit is open to new and existing business customers through their dedicated relationship manager or via the Lloyds app and online banking portal. The 4.01% rate "puts Lloyds in a leading position when compared to fixed business deposits offered by other providers", bosses say.
Bank's message to businesses
Fiamma Morton, Managing Director, SME Banking at Lloyds, said: “Every pound matters when you’re running a business, and money set aside for the future should be working hard too. This new rate gives businesses the opportunity to earn more from their surplus cash, with the certainty of knowing exactly what it will return. That can put them in a stronger position when the time comes to invest, grow or pursue their next opportunity.”
House prices see biggest annual fall in three years
The announcement comes as UK house prices recorded their biggest annual fall in three years in October, according to an index. The average property value fell by 1.2% annually, marking the steepest decrease since October 2023, Lloyds said. The average property price in October is £296,285, marking a £1,882 or 0.6% fall compared with September.
Andrew Asaam, mortgages director at Lloyds, said: “Housing demand is currently being tested by a challenging economic backdrop. Renewed inflationary pressures, driven in part by the conflict in the Middle East, are keeping borrowing costs high and adding to the squeeze on household finances, making some buyers understandably more cautious. However, it’s important to put October’s fall in context. House prices have changed relatively little over the past couple of years, as the market has gradually adjusted to higher interest rates. The recent rise in energy and other household costs has added to the pressure on buyers, so some adjustment in prices is not surprising. Looking ahead, conditions are likely to remain subdued in the near term, but we don’t expect this to lead to a sustained period of falling house prices. With wages continuing to rise faster than property prices, the gap between earnings and house prices should gradually narrow, helping affordability to improve over time."
