UK savers are continuing to focus on one-year fixed rate accounts, according to new research from Paragon Bank.

Paragon analysed CACI data and revealed that 59% of adult ISA and non-ISA fixed rate savings accounts that were opened in the 12 months to the end of May this year were on a one-year rate.

A further 33% opted for an 18-month or a two-year account, while just 7% chose terms beyond two years, and only 1% selected a five-year deal.

In the same period last year, the data from CACI indicated that 46% of savers chose a one-year fixed rate deal, while 16% chose a term longer than two years.

Furthermore, CACI’s figures showed that £120bn was placed in new fixed rate accounts of terms of two years or less in the 12 months to the end of May, compared to £30bn in the same period ending in May 2022. Approximately £8.2bn was placed into fixed rate accounts with terms longer than two years in the 12 months to the end of May 2023.

Fixed rate savings accounts have been rising throughout the summer in response to surging swap rates, although Paragon suggested that swaps have started to reduce in the last two weeks – suggesting that fixed term deals could have reached their peak.

“Although it’s fantastic that we have seen savers acting and switching their money into fixed-rate accounts, the vast majority of that money is in one and two-year rates,” said Paragon savings director, Derek Sprawling.

“With the market expecting interest rates to reduce over the medium term some savers might see value in longer-dated options available, even if the rate is lower than the best one-year rate available.

“With the swap rate starting to head downwards on the back of improved inflation data, we could see savings rates start to follow.”

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