Oxbury Bank has launched a new two-year fixed savings account paying a market-leading 5.11 percent interest rate.
Savers need a minimum deposit of £1,000 to open and interest is calculated daily and paid annually.
Fixed-rate savings accounts can be beneficial during the current period of falling rates, as these enable people to lock in an interest rate for a set length of time.
However, they often come with stricter withdrawal limits, requiring savers to be comfortable with investing money they won’t need to access during the account term.
Commenting on Oxbury Bank’s new deal, Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: “This week, Oxbury Bank has launched the rate on its Personal Two Year Bond Account, it steals the top position within its sector and pays a market-leading 5.11 percent.
“This may be an enticing deal for savers looking for a guaranteed return on their investments for the next two years.
“As is the case with many fixed term bonds, earlier access is not permitted, however, further additions can be made for 14 days from the account opening via a nominated account, which could be seen as an added bonus.”
Ms Eastell added: “It is also important for investors to note that the account must be funded within the first 14 days, otherwise the account will automatically close.
“Overall, the deal earns an Excellent Moneyfacts product rating.”
While Oxbury Bank may be offering the top rate in its sector, competition doesn’t fall too far behind.
iFast Global Bank places just behind with an Annual Equivalent Rate (AER) of 5.1 percent. There is no minimum deposit to open the account, interest is paid on maturity, and withdrawals are not permitted.
Hampshire Trust Bank is also offering competitive returns on its Two Year Bond (Issue 86), with an AER of 5.06 percent.
Savers can get started with just £1 and interest is paid on the anniversary of opening. Early withdrawals are also not permitted.
Commenting on the market, Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Savings providers continue to keep a close eye on future rate expectations, with variable rates seeing a mix of rises and falls across easy access, notice and Cash ISAs over the past six months.
“Most recently, this area of the savings market has shown a sign of resilience compared to fixed rates, where month-on-month, fixed bond pricing calmed in the aftermath of rate cuts.
“The unpredictable nature of interest rates results in a challenging situation for savers comparing accounts, as some of the best deals can be withdrawn relatively quickly.”
However, Ms Springall pointed out that ahallenger banks have been “particularly active” in recent weeks, adjusting their market positions in the top rate tables, such as those improving their rates to entice new deposits.
Ms Springall added: “A Base Rate cut could have a detrimental impact on the savings market.
“As we have seen in the past, rate cuts typically get passed on quickly compared to rises. As it stands there are already many savers out there who are not being paid a decent return for their loyalty and any future rate cuts could see their savings interest rates slashed. Savers must take time to review their existing account and switch if they are getting a raw deal.”