With everything else that’s been going on recently, we have almost forgotten that there was another Bank of England Monetary Policy Committee (MPC) meeting last week. At that meeting, for the seventh time in a row the MPC voted for the base rate to be increased – this time by 0.50%, to 2.25% - the highest it’s been for 14 years. So it’s unsurprising that savings rates are continuing to rise. But this time, it’s not just the base rate that has caused some of the changes.
This week, we’ll be focussing on some of the real movers and shakers, but to see how all the tables have ended the week, take a look at the best buy tables here.
RATES ARE CORRECT AS AT THE TIME OF PUBLICATION (30/09/2022). All up-to-date rates can be found on our Best Buy
tables.
Although this table isn’t the main course this week, there have been some changes that are interesting, including a couple of challenges for the top spot. And as we end the week, all of the top five are paying 2% or more. Two weeks ago it was just the top two accounts and at the beginning of the year the top rate on offer was 0.70% AER.
First, Yorkshire Building Society launched an intriguing easy access account called Rainy Day Account Issue 2. This is listed on our best buy table paying a rate of 2% - but you will actually earn 2.50% on the first £5,000, 2% thereafter. So, if you have more than £5,000 you’ll earn a rate than is blended. For example if you deposit £30,000 you’ll earn 2.50% on the first £5,000 and 2% on £25,000 – giving you a blended AER of 2.08%.
RCI Bank has increased the rate on its Freedom Saver account to 2% - putting it firmly back into the best buy table. Not only is this a higher rate for new customers, but it’s for existing customers too.
Sainsbury’s launched a new issue of its Defined Access Saver – Issue 32 is paying 2% but as the name suggests you cannot have unlimited access. You can make three penalty free easy access withdrawals a year – any more and the rate will drop to 0.80 AER for the remainder of the year.
Finally, as we end the week, Charter Savings Bank has swooped into the top spot offering 2.25% on Issue 28 of its Easy Access Account, on a minimum balance of ÂŁ5,000.
The Sainsbury’s and the Charter Savings Bank easy access rates are for those opening a new account, so if you have a previous issue of either of them, you may wish to check the rate you are earning – to see if you should switch into the new one.
Now we come to the main event!
As indicated in our article “Bank of England intervenes with £65 billion purchase of government gilts” the mini-budget last Friday (23rd September) sparked a storm in the UK gilt market, which led to a collapse of gilt prices and a rise in gilt yields. This indicated that the market expected the Monetary Policy Committee (MPC) to increase the base rate aggressively – perhaps even with an emergency MPC meeting to happen before the next scheduled one in mid-October.
As a consequence, new and higher rates on fixed term bonds have been coming thick and fast, sometimes making it onto our best buy tables for a matter or minutes, before being ousted by others.
As we’ve been reporting all year, unsurprisingly rates have been on the up since the base rate started to rise in December last year. But the last week, in particular, has been on another level.
On the day of the mini-budget (23rd September 2022), the best 1-year rate on offer was paying 3.60% and the best 2-year rate was 4%. As we head into the weekend, the best 1-year rate is now 4.11% - that’s an increase of over 14% in just one week. The best 2-year is 4.50% - a 12.5% increase.
So let’s take a whistle-stop tour of what’s been happening.
We begin as always by looking first at our 1-year table.
The first big move was from Monument Bank which leapt over the then best rate paying 3.48%, by offering 3.60%. And this was quickly followed by Charter Savings Bank and United Trust Bank which both launched new 1-year bonds paying 3.55%. But as the new week began, Newcastle Building Society blew past all of them to smash the 4% barrier by paying 4.10% on its 13 month bond (its maturity date was 3rd November 2023). However, this was only available for a matter of days and in the meantime Investec and Oxbury had launched new bonds paying 3.90% and 3.91% respectively. So the withdrawal of the Newcastle Bond, then left Oxbury in the top spot. Not for long though as on Friday (30th September) we saw a fierce battle for the top spot. United Trust Bank upped its offering to 3.95% but this was immediately usurped by Shawbrook paying 4%. And it wasn’t over there. The next move was from Vigin Money - matching Shawbrook, but Hampshire Trust Bank then launched a bond paying 4.02% - swiping the top place. However, in sneaky midnight manoeuvres, Atom Bank has seen off the competition by launching its latest 1-year bond paying 4.11% AER.
Over in our 2-year table, it’s been even busier!
Things started quite sedately although Atom Bank once again made quite a splash by launching the first 4% bond that we’d seen since February 2012, so very early on in Savings Champion’s history!
But it wasn’t long until Atom was way down the table as Zopa, Smart Save and Newcastle Building Society all launched better rates paying 4.01%, 4.02% and 4.25% respectively!
Of course, Smart Save was not happy with that, so raised its offering to 4.30%, only to be knocked off its perch once again, this time by Hampshire Trust Bank, paying 4.32%. The game of tag was not over though, as Smart Save once again pipped Hampshire Trust Bank by offering 4.33% AER.
Meanwhile, RCI Bank launched a new issue of its 2-year bond paying 4.30% - just a few days ago that would have been at the top!
Shawbrook Bank was the next to make its move by launching a convincing contender paying 4.40% AER. Surely no-one would top that?
But, yes, you’ve guessed it, Smart Save once again upped its offering to 4.41% but it's Cynergy Bank that is the real star, coming from no-where to offer 4.50% AER as we end the week. Who knows what’s going to happen next. What a week!!
Looking to our 3-year table, we again saw Smart Save as a very active player. Firstly the bank launched a new 3-year bond paying 3.81% knocking Hampshire Trust Bank into 2nd place with its previously market leading offering of 3.80% AER. However this leading pair were surpassed by Oxbury who hit the leading spot paying 3.82%, joining in with these cat and mouse moves. Market Harborough Building Society was the next provider to join in the fray – but with a convincing lead of 4.10% AER on its 3-year Fixed Term Bond 95 (maturing 31.10.2025).
The Market Harborough BS bond didn’t hold its lofty position for long, as Zopa, then Smart Save challenged them by launching bonds paying 4.11% and 4.12% respectively. Zopa clearly felt that enough was enough as its next move saw the provider leap to the top paying 4.30% - now head and shoulders above the rest. However Smart Save was not to be shaken off as it once again pipped the leader by offering 4.31% AER.
But there was still more action to come. The Buckinghamshire Building Society was the nest challenger to take the top spot with a bond paying 4.40% - but as the week ended this account has been knocked into joint 3rd place with United Trust Bank. Smart Save tried its usual trick of just beating the leader with a bond paying 4.41% - but Cynergy Bank was again the week’s winner with a new bond paying 4.60%. This means that in just two weeks the top rate in this table has increased by 21% - from 3.80% to 4.60% AER.
Last up in the fixed rate bond arena we head to our 5-year table, which once again has been extremely busy, especially over the last week.
Two weeks ago the best 5-year bond available was paying 3.71% but as the week ends, the lowest of the top five is paying 4.35%, with the top rate paying 4.55% - that’s a 23% increase of the best rate on offer.
Smart Save, Zopa, United Trust Bank and RCI Bank have all been key players once again, many of them playing leapfrog – but it was Tandem Bank that took the final lead into the weekend, with its Five Year Fixed Saver paying 4.55% AER.
The eagle-eyed among you may have spotted the anomaly which is that although the top 5-year rate has increased by 23% over the course of the last two weeks, the best 3-year bond is currently paying a higher rate than the top 5-year bond! It’s unusual to see shorter term bonds paying less than the longer term ones, but that’s been the case for much of the last couple of weeks. An indication that perhaps interest rates are expected to fall over the longer term? We’ll have to wait and see.
Once again, our fixed rate ISA tables have also been pretty busy which is good news, as with rates on taxable accounts paying so much more, savers will be utilising their Personal Savings Allowance (PSA) with far lower deposits than in the past. So as long as the ISAs pay a tax free rate that is higher than the rate after the deduction of tax on the equivalent non ISA accounts, then ISAs will once again become a tax haven for savers.
Secure Trust Bank was the first to kick off the latest action in our 1-year table claiming the top spot with an ISA paying 3.65%. But there was more to come.
Shawbrook Bank was the next to make a move to the top with its latest 1-year ISA paying 3.70% which reigned alone for at least a few days before Santander and the Virgin Money joined it at the top, matching 3.70%. However Kent Reliance has taken the lead at the last minute by quite some margin with its latest offering of 3.85%
Over two years Virgin, Santander, Aldemore and Kent Reliance have all been key players, plus Close Brothers making an expected brief showing. Close Brothers was the first to oust Virgin from its top spot with an ISA paying 4.15% - but once again it was short lived and withdrawn later the same day. Virgin was the next to withdraw its ISA, leaving to top account paying just 3.75%, before Aldermore and Santander stepped up paying 4% and 4.20% respectively.
Virgin clearly decided that it did want to be in the game after all, by launching a new account paying 4.25% - but as we end the week, it has remained in 2nd place, as a new account from Kent Reliance paying 4.30% has taken the title.
There’s been a little more to talk about in the 3-year fixed rate cash ISA table over the last couple of weeks, with all of the top five paying more than they were two weeks ago. In fact, in our last report only the top account was paying more than 4% - today it’s only the ISA in 5th place that is paying less.
Things didn’t bode well initially though, as Virgin Money, who had been paying the leading rate of 4.25%, launched a new ISA paying a lower rate of 4% - but still retaining the top spot. Aldermore took the opportunity to spend a few days at the top by launching a new ISA paying 4.10% - only for Virgin to decide it didn’t like playing second fiddle after all – launching its current market leading 3-year fixed rate ISA (issue 530) paying 4.35%
Over 5-years, there has also been a marked jump from the previous top paying account to the current one with Furness Building Society.
Two weeks ago, UBL was paying the top rate on its 5-year ISA of 3.70% - actually, the same rate it was paying on its 3-year ISA too. But Newcastle Building Society put paid to this and breached the 4% barrier at long last with issue 65 of its five year ISA paying 4%. There it reigned until the end of the week when first United Trust Bank took the lead with an ISA paying 4.05% but finally Furness Building Society has taken the top spot as we head into the weekend, with a 5-year ISA paying 4.20% AER.
Over the past two weeks, all of the top five variable rate ISAs have gone from paying a maximum of 1.90% to all paying 2% or more.
Nationwide made an initial move by launching its Triple Access Online ISA 14 paying 2%. As the name suggests this account only allows three penalty free withdrawals a year – but it broke the 2% barrier all the same.
Another well-known name, Coventry Building Society, was the next to make a move with another limited access but market leading Limited Access ISA (Online) (3) paying 2.25%. Coventry has held onto this top spot although the Tipton & Coseley Building Society has matched it with another Limited Access ISA paying 2.25% but on a minimum balance of £25,000 for this rate, so you’d need to be transferring old ISA in to qualify.
The remaining spots have been occupied by Cynergy Bank, paying the highest rate of 2.15% on an unrestricted easy access ISA, and Santnader with Nationwide taking up the bottom spots paying 2%
It has been good to see best buy rates continuing to improve - keep a close eye on our Best Buy tables for up to the minute information.
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