Although we are anticipating another base rate increase later this month, the expectation is that we are now nearing the top of the interest rate cycle. But, considering we are waiting for the base rate to rise further, it has been disappointing to see a general slowdown in competition, even between the variable rate accounts. However, as we have come to expect, there have been some bright sparks that have appeared briefly – and we’re hoping for more as we approach the end of the year.
RATES ARE CORRECT AS AT THE TIME OF PUBLICATION (02/12/2022). All up-to-date rates can be found on our Best Buy tables.
It’s been pretty quiet in the Easy Access table over the last few weeks and it looked as though Al Rayan would hang onto the top spot once again. But earlier in the week and for just the second time in a decade, the top easy access account breached the 3% level once again.
It has also been good to see a couple of well-known high street building societies back in the top five, although one has now been pushed out again.
Nationwide was the first high street name to be included after increasing the rate on its 1 Year Triple Access Online Saver 15 from 2.10% to 2.50% - putting it into 5th place. Of course, as the name suggests, only three penalty free withdrawals can be made each year.
Nationwide was pushed out of the table, firstly by a Raisin UK exclusive - the Rainy Day Easy Saver via Paragon Bank paying 2.60%. But then in a shock move, Al Rayan Bank was knocked off its perch by the Monmouthshire Building Society which increased the rate on its Premium Instant Account – Issue 3, from 2.25% to a market leading 3% AER. However, this was only available for a day and was withdrawn again due to massive popularity, seeing Al Rayan back to its top spot.
As we end the week though, another well known name, Coventry Building Society projected itself to the top of the table after increasing the rate for new and existing customers on its Limited Access Saver (Online) (6) from 2.25% to a market leading 2.85% AER.
With a further base rate hike this year entirely possible, could these best buy variable rates head higher still? Let’s hope so.
It’s fair to say that there have been more withdrawals and reductions in the last few weeks in the Fixed Rate Bond tables and across the board the best rates on offer have fallen. We really do seem to have passed the peak for the time being.
So let’s take a look at what has been happening to 1-year fixed rate bonds. I’m afraid that since our last Rates Rundown, the top rate on offer has fallen from 4.60% to 4.35%. Atom Bank has ended the week in the top spot with its app-only offering, while the next best rate is with the Union Bank of India paying 4.31% - this account can be opened in branch or by post only.
Over in the 2-year table, while three weeks ago Union Bank of India was offering 5%, the top rate now is 4.68% with Zenith Bank and Sensible Savings. Once again, Sensible Savings is an account the could be interesting for those who prefer the more traditional way of managing their savings, as it can be opened and operated both online and by post.
As we turn our attention to the 3-year table, I’m afraid the news is similar. Having been offered as much as 4.90% AER a couple of weeks ago, the best rates on offer have fallen, and as we head into the weekend the most you can earn is 4.75% with Nationwide Building Society and Zenith Bank. That said, just over two months ago the most you could earn was 3.82% - so these rates are still far better than we have been used to.
Finally, we look over to our five year fixed rate bond table and again the best rate available is 4.75%, with Zopa - so the same as you could earn on a 3-year bond. One thing to consider is that if inflation were to drop next year, as is being predicted, you could be getting a return that is greater than inflation for much of the term of the bond. Now that would look like a smart decision if this is what happens.
Looking across our fixed rate ISA tables, similar to the fixed rate bonds we’ve seen an increase in the number of best buy withdrawals – but some good news wound in there too.
Looking to our 1-year cash ISA table, unfortunately the best rate on offer has fallen again over the last couple of weeks, although the top rate is currently 3.81% - just 0.02% lower than the best rate three weeks ago. Kent Reliance briefly took the top place with a 1-year ISA paying 3.95%, however, within less than a week this was fully subscribed. Following the withdrawal of the Kent Reliance ISA there were more accounts pulled, leaving the top rate of offer at just 3.76% for a time. But, new launches from UBL, Shawbrook Bank and Charter Savings Bank have pulled things up a little.
The drop in the best rate on offer over two years has been a little more severe with the top rate available now paying 4.11% compared to 4.38% previously. But, over the last three weeks there has been quite a bit of jostling for the top spot. Kent Reliance took an early lead launching a 2-year ISA paying 4.40% but when this was withdrawn a week later, this left Charter Savings Bank in the lead, paying 4.21% as there had also been better paying ISAs pulled by Castle Trust Bank, Secure Trust Bank, Charter Savings Bank itself and Saffron Building Society. Hodge Bank sat atop the table for a day with an ISA paying 4.35% but withdrew this the same day it was launched. Charter then closed its previously market leading 4.21% ISA only to launch another paying 4.10%. But as we end the week it’s Virgin Money that has held the top spot with its latest 2-year ISA Issue 542 paying 4.11% Disappointingly Virgin had launched Issue 541 earlier in the week paying 4.22% but, once again, this was swiftly oversubscribed and withdrawn only to be replaced by the current lower rate.
Again our 3-year cash ISA table has been pretty quiet and more decreases than increases leaves the average of the top five paying 4.24% compared to 4.33% a few weeks ago. This includes the top rate which is slightly less than the 4.40% that was reigning when we last reviewed things, with Buckinghamshire Building Society now paying 4.35%.
Lastly, our five-year table and the story is the same here too I’m afraid. The best rate on offer has fallen from 4.45% to 4.31% - so less than the top 3-year ISA – and the average of the top five is now 4.19%, down from 4.28%.
So a disappointing three weeks but let’s not forget that six months ago the highest 1-year ISA rate was 1.76% AER and the top 5-year ISA was offering 2.35% – so things have improved dramatically.
Our Variable Rate ISA table sometimes includes notice ISAs – although often easy access options dominate. But that’s not the case at the moment with the top accounts from Mansfield Building Society paying 3% on its 180 Day Notice Account and Aldermore Bank still paying 2.80% on its 30 Day Notice ISA Issue 12).
The best easy access cash ISA is with Cynergy Bank paying 2.50%
The next Monetary Policy Committee (MPC) meeting at the Bank of England is due on 15th December, and it's highly likely thst the base rate will rise again. So hopefully there'll be more good news to come in the variable rate tables - however the best that we can hope for with the fixed rate tables is that some new competition will be forthcoming, otherwise we could see things falling further.
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