New data from Moneyfacts shows that UK savers could be £138 a year better off by switching to an ISA, as average fixed rates reach their highest levels in years.
Record product choice and rates
The Moneyfacts UK Savings Trends Treasury Report, published this week, revealed that overall product choice continued to beat all-time highs, rising to 2,617 savings deals, including ISAs. Excluding ISAs, product count rose to 1,871, the highest number of non-ISA products since records began in February 2007. The number of cash ISAs rose to 746.
The number of accounts paying above the Bank of England's Base Rate at £5,000 rose to 1,412, its highest since July 2012. As a result of one provider entering the savings market, the number of providers rose to 159. The number of ISA providers remained unchanged at a record high of 106.
Rate movements
Moneyfacts said the average easy-access rate remained unchanged at 2.53%. The average notice rate also remained unchanged at 3.40%. The average easy-access ISA rate remained unchanged at 2.72%, while the average notice ISA rate fell to 3.31%.
The average one-year fixed rate rose to 4.23%, its highest since November 2024 (4.24%). The longer-term average fixed rate jumped to 4.25%, its highest level in over two years (4.46% in January 2024). Moneyfacts said that the average one-year fixed ISA rate rose to 4.24%. The longer-term fixed ISA rate rose to 4.27%, its highest since January 2024 (4.32%). The Moneyfacts Average New Savings Rate has risen for the sixth time running to 3.60% and over the past year the rate has risen from 3.50% to 3.60%.
ISA advantage for higher-rate taxpayers
Caitlyn Eastell, personal finance analyst at Moneyfacts, said: “The fixed rate savings market is shifting in favour of ISA savers, with average one-year and long-term ISA rates now moving ahead of their non-ISA counterparts. Historically, savers have often faced a trade-off between securing competitive rates outside an ISA or keeping their interest tax-free.
“However, this shift could mean that this compromise may no longer be necessary. The wider savings market is also offering more opportunities for competitive returns, with 1,412 accounts paying above base rate, the highest number seen since July 2012.
“While growing choice is great for returns, savers, particularly higher-rate taxpayers, must carefully consider where they keep their pots. Moving to a competitive ISA could mean more of their returns stay in their pocket.
“For a saver with £20,000, the average one-year ISA rate would give around £848 in interest over a year, compared with £846 in a non-ISA account. While the £2 difference may seem small, for a higher-rate taxpayer with a £500 Personal Savings Allowance, the ISA could leave them around £138 better off, with the full £848 interest kept compared with around £708 from the non-ISA after tax. On larger balances, the benefit of switching becomes even more apparent.
“Fixed-rate savers may be able to lock in some of the strongest returns seen in years, with average long-term ISAs and non-ISA rates hitting their highest levels since January 2024, while the average one-year non-ISA also reached highs not seen since November 2024.
“Not only this, but longer-term rates have consistently remained higher than their one-year equals, with the average non-ISA rate higher for the past six months and the ISA rate for the past two months. This could be a valuable opportunity for savers who can afford to leave their money untouched to secure a competitive return and protect themselves against any future falls in savings rates.”
