Competition has generally moved from the fixed term bonds to the variable rate accounts recently, as the governor of the Bank of England warns that we are close to the top of this interest rate cycle.
RATES ARE CORRECT AS AT THE TIME OF PUBLICATION (15/09/2023). All up-to-date rates can be found on our Best Buy tables.
Let’s start with the Easy Access table.
After a quiet couple of weeks, the news that Santander had launched a new Easy Access Saver Limited Edition (Issue 3) account paying a market leading rate of 5.20% AER caused a bit of a boost. This was an extraordinary move from a high street bank but as expected it was very short lived. The account was withdrawn on 12th September – earlier than hoped, obviously as it was highly popular. The good news is that there has been a flurry of activity from a number of providers ever since.
Firstly the Mansfield Building Society launched its Double Access Tracker Saver (1st Issue) paying 5% slotting into joint 2nd place behind Santander. And a few days later Cynergy Bank launched the latest issue of its Online Easy Access account (Issue 66) also paying 5%
Oxbury was the next to make a move into the top five, paying 4.94% AER but a day later it was knocked out of the top five by the Family Building Society’s Online Saver (6) paying 4.96%, then Tandem joined the 5% gang with an increase to its Instant Access Saver.
But things were not over yet! As we ended the week there was a flurry of activity with Paragon taking the top spot with its Double Access Account Issue 2 paying 5.05% followed by Kent Reliance and Monument Bank, both upping their offerings to 5.01%.
So two weeks ago the average of the top five were paying 4.97%, even with the Santander account in the mix. But at the time of writing, even with that account withdrawn, the average of the top five is 5.01% AER as all of the top five are paying 5% or more!
1 Year
Whilst it’s been a bit quieter over the last couple of weeks and no one has challenged NS&I for the top spot, there has been a little bit of competition pushing rates of the accounts below NS&I up a little.
Family Building Society and Ahli Bank (via Raisin UK) were the first to make a move as both increased the rate they were offering to 6.10% AER.
Raisin UK has recently reintroduced a welcome bonus to new customers – a £25 bonus paid after six months if you deposit and maintain a balance of at least £10,000 - this can turn a competitive account into a market-leading one!
For example, if you were to deposit £10,000 into the top 12-month bond mentioned above provided by Ahli United Bank paying 6.10%, the £25 bonus could push the effective rate earned up to 6.35% - beating even the NS&I 1-year Guaranteed Growth Bond. Of course the more you deposit, the more this bonus effect is diluted – for example if you were to deposit £20,000, then the effective rate including the bonus would be 6.23% AER – but it’s still good to have that little extra. *
In order to receive the bonus, savers must enter the promo code 'OFFER25' having clicked our unique link, whilst signing up for a new Raisin UK Account, which they must do so before midday on the 25th September 2023. Once your Raisin UK Transaction Account has become active you must apply for and open a savings account within the platform, and fund the account with a minimum of ÂŁ10,000 by 11:59pm on 31st October 2023.
Union Bank UK was the next to make a move, nudging up by paying 6.11% and has remained in 2nd spot ever since. And an increase from Smart Save and Kent Reliance to 6.06% means that the average of the top five has increased from 6.05% two weeks ago, to 6.11% AER today.
2 Years
There is very little to report in the 2-year table – the top five rates on offer are all still paying 6.05% AER although Union Bank of India and Charter Savings Bank have joined the table. Union Bank of India is paying 6.05% on its 18 month bond, joining OakNorth and Ford Money with bonds of the same term and the same rate, while Ford Money remains as the top 2-year bond also paying 6.05%, This seems to be the ceiling that no one is prepared to break for the time being.
Longer Term Bonds
There is nothing to report in the longer-term tables but as we have reported before, even the top rates of offer are lower than the short term. The top 3-year bond with OakNorth Bank is still paying 5.96% and the top 5-year bond is 5.85% AER with Tandem. This is a clear indication that the markets are expecting rates to be lower in the next few years.
All in all, pretty disappointing. But, even though the longer term bond rates are a little lower than the shorter term, don’t immediately dismiss the idea of locking some cash away for longer. If inflation does fall close to the 2% target in the near future, by locking in for three or perhaps even five years at the current rates of close to 6%, you could end up in the enviable position of earning interest that is greater than inflation for at least part of the term of the account.
The shorter-term fixed rate cash ISA tables have also seen a bit of activity over the last couple of weeks, offering opportunities to those looking to protect the interest they are earning on their cash from the tax man.
1 Year
Over 1-year the top rate on offer has increased from 5.78% to 5.83% as Shawbrook bank launched issue 81 of its 1 Year Fixed Rate Cash ISA Bond paying 5.83% AER.
2 Year
Over 2 years, the top rate available has also increased from 5.78% AER to 5.81% today with Close Brothers, although you need a minimum of ÂŁ10,000 to open the account. Kent Reliance has also upped its offering to take the second spot paying 5.79% after Charter Saving Bank withdrew its ISA paying 5.80% after just a few days.
There have been a couple of small improvements in the 3-year table but absolutely no change for those looking for a 5-year cash ISA.
In the 3-year cash ISA table, Secure Trust Bank increased its latest 3-year ISA rate to 5.60% taking the top place from Zopa but Zopa retaliated a couple of days later by pipping Secure Trust Bank paying 5.61% AER. And that’s where we leave things for the weekend.
Once again, the Easy Access Cash ISA table has shown some good improvements over the last couple of weeks and the top rate on offer is now with app-based moneybox, paying 4.75%. The thing to watch out for with this account though, is that you can’t be sure exactly who your cash will be deposited with. We have been able to confirm that for their Cash ISA, moneybox currently works with HSBC Bank PLC and Santander UK Plc and while strangely they can’t confirm exactly who the money will be distributed with, they confirm that savers “should assume that up to 50% of their Cash ISA balance is held with any one of the partner banks we use.” We are still unable to confirm exactly what that means!!
On the more straightforward basis, Cynergy Bank has launched a new issue of its Online ISA and Issue 42 is paying 4.70% AER, matching the rate offered by OakNorth Bank and the restricted access option from Paragon Bank, the Double Access Cash ISA.
Like the standard easy access table, it’s good to see the best buys on offer continuing to increase so, whatever you do, please review the interest rates you are earning and switch if you can do better.
Whilst there has certainly been a slowdown in the competition on some of our tables, there are still come great rates to be found, especially if you have cash languishing in a poor paying account. So, take a look at our best buy tables, and vote with your feet if you are not earning as much as you can.
*We are occasionally paid by some providers if you click through from our Best Buy Tables and open a savings or current account with them. We will never accept a payment that compromises in any way our independent, whole of market approach to providing information on savings products. For clarity we will indicate those companies who remunerate us with an asterisk (*).
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