As the after effects of the Gilt market turmoil continues to have a positive impact on savings rates, we've seen a couple of providers offer fixed rate bonds paying 5% - although you will need to tie up your money for five years. And in other news, Santander are at it again, launching a market-leading easy access account this time.
But what else is on offer for active savers?
It’s not been very busy in the easy access table over the last couple of weeks, but the big news is the introduction of a High Street Bank to the top spot.
Al Rayan Bank had been holding fast for well over a week but just as we were thinking that no-one would challenge the Sharia provider, Santander, of all Banks, swooped in and knocked the competition out of the park.
The eSaver Limited Edition (Issue 1) shot past the others with a rate of 2.75% gross/AER on balances of £1 to £250,000. But it’s only for 12 months, as in a year’s time your money will be moved to the Everyday Saver account, which is currently paying just 0.20%!
Then, just as we were recovering from this news, Cynergy Bank decided to increase the rate it's offering on the latest issue of the Online Easy Access Account (Issue 53). The Bank has raised the rate from 2.12%, to 2.75% and this is for new and existing customers who have already opened this issue of the account. Good news indeed.
As covered last time, the mini-budget on 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.
Well, an emergency meeting hasn’t happened so far, but best buy fixed rate bonds have continued to rise, with the top rates currently of offer higher than they have been for well over a decade!
We begin as always by looking first at our 1-year table.
Two weeks ago, we were blown away that Atom Bank had launched a bond paying 4.11% AER. Little did we know that there was far more to come.
The first big key moves came from Investec, offering 4.15%, then Secure Trust Bank took the lead with it latest bond - maturing on 9th November 2023 - paying 4.20%.
Of course, that’s not the end. The next day Close Brothers Savings launched a short-lived bond paying 4.25% - but this was available for just a day as it was withdrawn, along with the Secure Trust Bank bond, so the best rate on offer was back down to 4.15%. However, good news, the very next day Charter Savings Bank leapt to the top of the table paying 4.31% and this was pipped a couple of days later by Aldermore with a new record rate of 4.35%.
Coventry Building Society was the next to make a move with a bond paying 4.40% - although with a maturity date of 31/12/2023, it’s more of a 14 month bond than a 1-year bond! Once again, this top rate was available for just a couple of days before being withdrawn from sale, however as we head into the weekend, three news bonds paying better rates were all launched on Friday. Kent Reliance paying 4.45%, Allica Bank paying 4.50%, but then Cynergy Bank took the top spot with its latest offering of 4.55%. Two weeks ago, that was the best rate you could earn on a 2 Year Bond.
So, onto the 2-year table.
Once again there has been a pretty significant improvement on the top rate on offer over the last couple of weeks.
Firstly, as mentioned above, Secure Trust Bank was paying 4.55% but Smart Save did its usual trick of pipping them by launching 4.56% AER. However, as with the 1-year bonds, Close Brothers launched a short lived, then market leading bond paying 4.60% which was withdrawn the next day. However, Charter Savings Bank was poised to take over with a bond paying 4.61% but Smart Save again spoiled the party by leapfrogging by the smallest of margins – 4.62%. Once again this was very short loved as Smart Save withdrawn that account later the same day. The next movers were Cahoot (which is actually Santander!!!) and Coventry Building Society with bonds both paying 4.70%. Although the Coventry bond has now been withdrawn, the Cahoot bond is still available. However, it has now been superseded by a number of accounts, so is only just hanging on in the 5th spot. As we head into the weekend, Kent Reliance and DF Capital are paying 4.75% AER, while Smart Save, is paying 4.76%. But the winner is Allica Bank with a market leading bond of 4.80%.
Looking to our 3-year table, it’s been a high street bonanza. Nationwide Building Society made a surprise move by leaping to the top of the table with a bond paying 4.75% AER. It hung onto the lofty spot for a few days before Coventry Building Society and Cahoot (remember, this is part of Santander) launched bonds paying 4.85% and 4.80% respectively.
As with the shorter term tables, the Coventry bond was withdrawn the next day but Smart Save was there to take up the baton – with a bond paying 4.86% as we end the week.
Last up in the fixed rate bond arena we head to our 5-year table, which has broken the 5% barrier.
Close Brothers once again was the first mover paying 4.60% but Smart Save pipped them with a rate of 4.61%. A couple of days later though Atom Bank rose to the top of the table with a bond paying 5% which kept its spot for a couple of days before being pipped as usual by Smart Save, which goes into the weekend with the highest paying fixed rate bond on the market paying 5.01% AER.
Once again, our fixed rate ISAs tables have 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 actually withdraw it’s 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 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, 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 market 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 to 4% barrier at long last with issue 65 of its five year ISA paying 4%. There is reigned until the end of the week which first United Trust Bank took the lead with an ISA paying 4.05%. then Furness Building Society taking 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.
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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