The amount of money held in fixed rate savings accounts has almost doubled over the past year, analysis by Paragon Bank has suggested, with savers responding to rising interest rates.

Paragon’s analysis of CACI’s weekly data – which compiles cash savings account data from 26 providers – showed that £258bn was held in fixed rate accounts as of the week commencing 28 August, significantly up from £130bn at the same point last year.

Fixed rate non-ISA accounts experienced the greatest percentage increase after rising by 122% over the period, from £53.6bn to £119.1bn. Fixed rate ISA balances climbed from £76.5bn to £138.8bn over the 12 months, an 81.5% increase.

Conversely, the amount of savings held in instant access variants fell by 9.1% during this period, with ISA instant access account balances 16.8% lower at the period end at £137.2bn, and non-ISA accounts 6.9% lower at £528.1bn.

Although total balance growth was recorded in the non-ISA fixed-rate variant, the greatest level of switching activity was recorded between fixed rate and easy-access ISAs. Paragon’s findings showed that fixed rate ISA balances accounted for 49% of total ISA balances at the end of week commencing 28 August, compared to 31% at the same point last year. Easy access ISA balances fell from 66% of the total to 49% this year.

The switch was less pronounced in the non-ISA market, with non-ISA easy access balances accounting for 89% of the total at this point last year, compared to 79% in 2023. Non-ISA fixed rate balances moved from 8% to 18% over the same period.

Paragon director of savings, Derek Sprawling, said: “The shift in the savings market over the past 12 months has been unprecedented, we have never experienced the amount of switching to fixed rate variants and new account openings before, particularly in the ISA segment of the market.

“To record a 98% increase in fixed rate balances overall, and a more than doubling of the amount held in non-ISA fixed-rate variants, will have changed savings habits for years to come. Our experience shows that if savers hold money in a fixed-rate account, that money will typically switch to a new fixed-term on maturity.”

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