Afin Bank launches one-year 4.52% fixed bond as savings rates slide
App-only account tops best-buy tables even as providers cut rates and fewer fixed bonds beat inflation
Afin Bank has launched a one-year fixed-rate savings account paying 4.52%, placing it at the top of the best-buy tables and displacing Chetwood Bank’s 4.5% one-year fix.
The product arrives at a time when many savings providers have been cutting rates since the Bank of England reduced the base rate to 4%. With consumer price inflation at 3.8%, data from rates scrutineer Moneyfacts Compare show fewer fixed-rate bonds are currently delivering real (inflation-beating) returns for savers.
The new Afin Bank account is an app-based product that can be opened with a minimum deposit of £1,000 and accepts balances up to £200,000. Customers must download Afin’s app to apply and have 14 days to fund the account once the application is open. Savings placed in the account are protected under the Financial Services Compensation Scheme up to £85,000 per eligible person in the event of bank failure.
This is Money’s savings calculator shows a saver holding £10,000 in the one-year fixed account would earn about £461.48 in interest over the 12-month term. The average one-year fixed bond rate currently stands at 3.97%, meaning Afin’s rate sits noticeably above the market average.
Afin Bank was founded to support people from the African diaspora and other foreign nationals in the UK who can face barriers to mortgages from mainstream lenders, but its savings product is available to anyone who meets the account opening requirements.
Moneyfacts Compare reported that fixed-rate bonds paying above inflation now make up about one quarter of the market, and that the number of fixed bonds delivering inflation-beating returns fell by more than 100 over the past month. The decline in inflation-beating offers reflects a wider shift in the market following the Bank of England’s base-rate cut to 4% and subsequent rate adjustments by providers.
Industry observers say the move means many savers face diminished real returns, with inflation eroding the purchasing power of cash held in lower-yield accounts. Market positions on best-buy tables can change quickly as providers revise rates, introducing volatility for savers shopping for the highest short-term fixed rates.
The Afin Bank launch highlights that opportunities to secure above-average one-year fixed returns still exist, but broader data from comparers and regulators show the pool of inflation-beating fixed bonds has narrowed as the market adjusts to lower official interest rates.