I’m afraid that the fall in top savings rates has continued – all the top fixed term bonds rates have dropped in the last few days alone.
The best buy easy access accounts remain static and as a result, many of the top fixed term rates are actually paying less, even though there is no access to the money locked away. Of course, the easy access market is variable though and therefore the rates could fall at any time.
So, with the markets now accepting that the base rate has reached its peak, we may not see many more increases. And if you are thinking of locking some money away to hedge against further rate cuts, you might want to get a move on.
RATES ARE CORRECT AS AT THE TIME OF PUBLICATION (05/01/2024). All up-to date rates can be found on our Best Buy tables.
There’s been no change at all in the easy access table over the last couple of weeks – which is good news and what we would hope to see given that there has been no change to the base rate since August last year.
Metro Bank has dominated the top spot for a few weeks now, offering 5.22%, keeping Ulster Bank in 2nd place paying 5.20% AER. But no-one else seems to want to challenge them.
The same can’t be said for the fixed rate bond market. Across the board, the best rates on offer have continued to fall as the markets gets used to the idea that base rate has peaked – and the next move will be downwards, possibly in a few months’ time.
As a result there has been a distinct race to the bottom of the tables, as those accounts finding themselves in the top spot have not remained there for long and have themselves been withdrawn or reissued at a lower rate.
1 Year
At the time of our last Rates Rundown, the top rate available was 5.66% with Metro Bank and the average of the top five was 5.49%.
But things have deteriorated and as we head into the weekend, the top rate is now 5.30% with Investec Bank, a bond that was launched in mid December and the average of the top five has fallen to 5.25%.
2 Years
It’s a very similar story in the 2-year table and as we know, the longer the term, the lower the best rates available tend to be.
Just before Christmas, Metro Bank was at the top of the table paying 5.66%, but Metro withdrew all its fixed rate accounts over the festive period and we are waiting to see what they will return with.
In the meantime, it’s Union Bank of India that is holding the top spot although they have dropped the rate of offer from 5.40% at the end of December, to the current rate of 5.15%. In fact it’s been all change in this table, including now an Earl Shilton Building Society Bond that was launched in July last year – one of the last 5% bonds still standing in this table. The 5th place rate has now dropped below 5%, to 4.95% with Bank of Ceylon via Raisin UK and the average of the top five is 5.03% - just keeping its head above water.
3 Years
Only one of the top five is still paying 5% in the 3-year table – the Post Office reduced the rate on offer to 5% on 8th December last year. All the other bonds are paying between 4.60% to 4.80% bringing the average of the top five to 4.76%, from 5.01% as we ended 2023.
5 Years
In the 5-year table, there’s not been sight of a 5% bond for three weeks now. At the end of last year, the top rate was with UBL UK, paying 4.75% but even that has been withdrawn as we end the week, leaving Bank of Ceylon via Raisin UK at the top, paying 4.55%.
Unfortunately, the bad news continues into the Fixed Rate ISA arena too, although there has not been quite as much activity.
With Metro withdrawing its 1-year ISA paying 5.41% over the Christmas period, and UBL reducing the rate on its 1-year ISA from 5.10% to 4.95% between Christmas and New Year, this left four providers offering 5%, with the remaining one paying 4.95%. Charter Savings Bank was the next to withdraw its 5% ISA but luckily Shawbrook Bank made one of the only positive moves across the whole market, launching its 1-year ISA Issue 86, paying 5.01%, to take the lead as we ended the year.
Unfortunately, although Shawbrook’s ISA is still available, only the Post Office is still offering 5% too - the remaining three spots are all paying 4.90% as we end the week. The average of the top five has dropped from 4.98% to 4.94% - so not as bad as the non-ISA equivalent.
The 2-year table has been a little quieter although unfortunately the top rate has dropped below 5% with the withdrawal of the Metro ISA. As we end the week the top rate in this table is 4.95% - so a little lower than the 1-year table.
It’s been worse in the 3-year table as once again the remaining 5% ISA has been withdrawn and now the top two ISAs are paying just 4.50% each and the 5th position is an ISA with Sainsbury’s Bank paying 4.10%. Just before Christmas, the bottom spot was 4.50%, so this term has seen some tough knocks.
Equally the 5-year table has taken a bit of a bashing. Before Christmas the top rate from UBL UK was 4.81% and average of the top five was 4.48%. But as we head into the weekend, West Brom Building Society and Zopa share the top spot with their current ISAs paying 4.30% and the average has fallen to 4.17% with the two bottom places both paying 4%.
It would be good to think that as we head towards the end of the tax year, there will be a bit more competition in the ISA market in particular. So watch this space.
@savingschampion
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