Tentative signs of recovery in the savings market are starting to appear with the return of 5 per cent interest rates. Several fixed-rate bonds are offering 5 per cent returns for the first time in eight months — but only for savers prepared to lock away their money until 2014.

Despite the Bank of England base rate hovering at the historically low rate of 0.5 per cent, returns on five-year fixed-rate bonds have increased by 1.13 per cent since March, according to Moneyfacts.co.uk. Michelle Slade, an analyst at the financial website, says: “Volatility in the money markets is prompting providers to turn to their savings book to fund their lending activities. To attract savers from their competitors, providers are offering ever-increasing rates.

“Savers are receiving a welcome boost after months of watching interest rates on their money plummet.”

The two market-leading fixed-rate bonds are from Clydesdale Bank and Newcastle Building Society. Both offer 5 per cent for five years.

Clydesdale Bank’s account requires a minimum investment and operating balance of £2,000, up to a maximum of £5 million, while Newcastle Building Society requires a minimum of £5,000, up to a maximum investment of £500,000. Both accounts require you to apply online, with the Newcastle account operated by post. Newcastle Building Society also has a five-year fixed-rate cash Isa, with a rate of 5 per cent, on deposits from £1 to £43,200.

Although these rates seem appealing at the moment, with the average savings account offering only 1.73 per cent, experts warn that it may be worth holding fire before opening a 5 per cent bond or Isa. Andrew Hagger, of Moneynet.co.uk, says: “Locking in for five years is going too far. We have a base rate at a record low, which means that interest rates are only going to go one way. If you go for a five-year account, you may find, a couple of years in, that your rate is looking uncompetitive as others shoot up.”

Mr Hagger adds: “Interest rates will pick up further. It’s just a matter of when. I would not recommend fixing for more than two years at present. The rates offered by shorter-term fixed-rate accounts are not that much less than 5 per cent, anyway.”

Short-term fixed bond rates have also risen in the past eight months, according to Moneyfacts, with the average two-year bond rate now at 3.5 per cent and the average one-year bond rate at 3.09 per cent, compared with 2.83 per cent and 2.78 per cent respectively in March.

The best two-year bond, Newcastle Building Society’s Fixed Postal Bond 5, offers an above-average 4.5 per cent on between £5,000 and £500,000 until August 2011. Ruffler Bank’s Two-Year Fixed Term Deposit Account pays savers 4.36 per cent on a minimum investment of £10,000.

For those with a smaller amount of money to save, ICICI Bank’s HiSave Fixed Rate Account pays 4.35 per cent on deposits starting at £1,000, and the Birmingham Midshires Two-Year Fixed Rate Bond pays 4.25 per cent on a minimum of £1.

The highest-paying short-term bond is from Skipton Building Society, with a rate of 3.85 per cent on a minimum deposit of £500 fixed until next February.

Ruffler Bank’s Fixed Deposit account is a 12-month bond with a rate of 3.76 per cent, but the minimum investment is £10,000.

Abbey also has a reasonable one-year fixed-rate bond paying 3.75 per cent, but you must find £25,000 to open an account.

If you do not wish to lock away your money at all, some decent rates have been available on easy-access accounts in recent weeks. Savers must be aware, though, that this is because of the addition of hefty bonuses that disappear after a year. For example, Leeds Building Society has a new online easy-access account paying 3.05 per cent, but this includes a 1 per cent bonus which ends on July 31 next year, leaving the account paying a less attractive variable rate of 2.05 per cent.

Similarly, Egg’s new Savings Account offers a rate of 2.8 per cent on minimum deposits of £1, but this is dependent on a fixed year-long bonus of 1.55 per cent.

Alliance & Leicester yesterday introduced its Online Saver Issue 5 account, paying 3.15 per cent. However, this includes a tiered bonus that decreases as you invest more.

Mr Hagger says: “Some of the instant-access rates are improving, but be careful to consider the bonuses. You have to be pretty switched on to remember to transfer your investment in a year’s time to avoid being caught out by the dropping rate.”

The best return available to savers who do not want the hassle of a bonus account is 2.76 per cent on the Scarborough Investments Direct Instant Access Account, with an opening balance of at least £1,000.

Standard Life Bank’s Cash Isa Direct Access pays 2.65 per cent, but because this is a tax-free Isa account customers can only deposit up to £3,600 a year. You can open the account with £1.

Barnsley Building Society has an online saver account that pays 2.5 per cent on your deposits from as little as £1 to £1 million.

Wooing older savers

Many lenders now offer specific savings products for older customers. The market-leading easy-access account pays 3.25 per cent and is available only to over-50s.

Coventry Building Society’s eSave account allows unlimited penalty-free withdrawals, though its rate is fixed for 12 months.

This will be welcome news for the 1.8 million over-50s who are putting aside money for their grandchildren, and the one in ten over-50s saving for adult children, according to research by Saga.

Other best-buy products include West Bromwich Building Society’s 90-day notice account for over-65s, with a rate of 2.84 per cent, and Saga’s two-year fix at a competitive 4.15 per cent.