Bond market mayhem has a silver lining – savings rates are soaring! SYLVIA MORRIS picks the very best deals for YOUR money

Last week’s turmoil in the bond market at least has one silver lining – it is proving to be great news for savers.

Rates are rising on both fixed-rate bonds and cash Isas as providers jostle to sit at the top of the best buy tables.

The interest rate paid on government bonds is a benchmark for the cost of borrowing in our financial system. Higher rates feed through to mortgage deals – which are already rising – and savings rates on fixed-rate bonds.

Providers have to pay higher rates to attract savers and stop them shifting their cash into other products, such as government bonds, for better returns.

Normally, it is the newer less well-known banks which dominate the best buys.

But at the moment the big banks, and even National Savings & Investments (NS&I), are top of the list.

After a lot of jostling last week as the bond markets reacted to Prime Minister Andy Burnham’s maiden speech in Parliament, the top payers on one-year fixed-rate bonds include MBNA, part of Lloyds Bank, at 4.85 pc, Tesco Bank, an offshoot of Barclays at 4.84 pc, while NS&I pays 4.82 pc. Shawbrook Bank also upped its one-year fixed-rate bond to 4.87 pc.

On tax-free fixed-rate Isas, NatWest launched a deal last week at an impressive 4.72 pc. Hodge Bank then trumped NatWest with 4.73 pc on its online account, followed by Charter Savings Bank with 4.74 pc yesterday. If you haven’t used your £20,000 Isa allowance for this tax year and are happy to tie your money up, go for an Isa first as your interest is automatically tax-free.

The NatWest account is available online and through its branches. Your money is tied up until October 27 next year. If you are planning to open one in your nearest branch, take your own tablet or smartphone along.

Last week’s turmoil in the bond market is proving to be great news for savers as rates are rising on both fixed-rate bonds and cash Isas

Staff won’t open it for you but will help you open one online using your own device. If you don’t fancy that, then your next best rate on the High Street is 4.5 pc from larger building societies Nationwide, Leeds and Principality, while Skipton pays 4.64 pc fixed for 18 months. Among the smaller societies, Scottish BS pays 4.51 pc and Furness 4.5 pc.

On fixed-rate bonds, the MBNA and Tesco accounts are available online, as is NS&I’s 4.82 pc bond, or you can open the NS&I account over the phone using your debit card or send a cheque in the post.

Make sure you don’t exceed your Financial Services Compensation Scheme limit if you have a large deposit. You are covered up to £120,000 with each provider, but in some cases a single provider operates under more than one name.

With NS&I, your money is guaranteed by the Government.

Win up to £25,000 in new prize draw 

Skipton BS is launching a monthly prize draw where members can win up to £25,000.

Every month between October 2026 and September 2027, it will pay out a total of £50,000 to eight members picked at random.

There will be one £25,000 prize, two at £10,000 and five £1,000 prizes. You will be entered automatically if you are 18 or over and have at least £100 in savings or an outstanding mortgage balance of the same amount.

If you have been a member for less than two years, you will receive one entry, rising to a maximum of five for those who have been with the society for 11 years or longer.