Some savers could get roughly £3,000 in interest over the full term

Savers can now lock in a market-leading return of five per cent on a fixed bond for the first time since 2024.

The milestone rate is available on a three-year deal, giving people the chance to secure a guaranteed return as household budgets remain stretched.

The product behind the headline figure is the Investec Save three-year fixed rate saver, which pays five per cent gross/AER on a yearly basis.

For anyone with £20,000 to put away, this could deliver roughly £3,000 in interest over the full term, approximately £750 more than the £2,240 they would earn at the current average new savings rate of 3.60 per cent.

Caitlyn Eastell, personal finance analyst at Moneyfactscompare.co.uk, described the development as a welcome shift for savers who have been shortchanged in real terms in recent years.

"For the first time since 2024, the market-leading fixed bond now pays a five per cent return, with savers now able to lock this return in for three years," she said.

"This marks a positive spin that gives them the chance to make their cash work harder."

Ms Eastell stressed that regularly checking savings pots can make a meaningful difference over time.

"Even if the gap may seem small, it can quickly translate into hundreds of pounds in extra interest," she said.

"Around £750 extra is not a small amount and teaches a valuable lesson that savers don't need to have more money to get a better return, instead they may just need to move money they already have."

The Investec Save deal requires a minimum deposit of £5,000 and caps investments at £250,000.

It is opened and managed entirely online, with additional deposits only permitted during the first seven days after the account is set up. Withdrawals are not allowed during the three-year term.

Ms Eastell cautioned that fixed bonds are only suitable for those confident they will not need access to their cash before the term ends.

"Some of the best easy access rates also offer around five per cent, making them an ideal alternative for those needing money at short notice, such as for emergency funds," she noted.

She also warned that top deals tend to be pulled quickly. "The most competitive deals can be short-lived, so those considering the switch would be wise to act sooner rather than later," she added.

The move by Investec reflects broader dynamics in the bond market, where investors are pricing in a deteriorating fiscal outlook for the UK.

Rising government spending under the Burnham premiership has increased expectations that interest rates may climb further.

Darius McDermott, of Chelsea Financial Services, said: "There's no fooling the bond market, and so far it has taken a dim view of the new administration's early fiscal signalling."

He explained that higher gilt yields tend to feed through into expectations for where the Bank Rate will settle.

"Savings providers have been quick to reflect that in the rates they're offering, with Investec's five per cent bond evidence of that," Mr McDermott added.

For savers, the upshot is that competitive returns may continue, but locking in now could still prove the wiser course.