Fixed Term Bond rate rises have continued to slow, signalling a peak has occurred. But the latest inflation figures could mean that there will be more base rate hikes to come than previously expected – especially with the variable rate accounts.
RATES ARE CORRECT AS AT THE TIME OF PUBLICATION (18/08/2023). All up-to-date rates can be found on our Best Buy tables.
Let’s start with the Easy Access table.
It’s been a great couple of weeks for those looking for an easy access account.
Immediately after the last Rates Rundown Shawbrook Bank’s previously market leading account paying 4.63% was well and truly challenged and dropped down into third place. First to make a move was Secure Trust Bank, increasing the rate on its Access Account (Issue 9) to 4.65%. But in just a matter of hours, Tandem made a meaningful increase to the rate on offer on its app-only Instant Access Saver. The underlying rate of the account was increased to 4.65% but the account also offered a top up bonus of 0.35% - taking the total amount to 5%. This is the highest easy access rate since 2009!
This seemed to activate a flurry of positive activity as a number of accounts increased, although no-one initially challenged Tandem. Paragon increased the rate on its Double Access Issue 1 to 4.75% from 4.65% and then Cynergy launched a new issue of its Online Easy Access Account – issue 65 – paying 4.80%, swiftly followed by Oxbury Bank, matching Cynergy with its Personal Easy Access Account Issue 1.
There was a brief time-out for Tandem, when it withdrew it account, allowing Monument to take the top spot with its Easy Access Savings Account, paying 4.81% AER. Tandem did return after a weekend hiatus, but just for a couple of days, leaving Monument in the top spot once again. Furness Building Society then decided to make the bold move of taking the narrative from Tandem by launching its Triple Access Saver (Issue 1) paying 5% AER, although as the name suggests you can make just three withdrawals per year - any more and your cash will be moved to a lower paying account. The other thing to mention about this account, which may be considered either a positive or a negative, is that the account much be opened and managed either in branch or via the post.
With £270bn sitting in current accounts, hopefully some of those who are allowing this cash to languish and lose more than they need to lose to inflation, will switch and start earning some meaningful interest.
I’m afraid it looks like there’s no immediate change to the overall sentiment that fixed rate markets may have peaked for the time being, even given the recent inflation figures. There’s been very little activity across all the terms, although some of the shorter term top rates available have improved slightly.
1 Year
The above said, the top rate on the 1-year best buy table has fallen over the last couple of weeks, from 6.06% to 6.01% and the average of the top five has fallen to 6%, down from 6.05%.
While it’s not been a case of a race to the bottom, Smart Save has made sure it’s not paying more than it has to. Moving from the top spot paying 6.06%, it is still at the top of the table but the current rate on offer is 6.01% AER. All of the other four spaces are paying 6%. Two weeks ago the lowest paying rate of the top five was 6.04% AER.
2 Years
The news from the 2-year table is slightly better, but not a lot. The top rate available as we head into the weekend is 6.10% from Recognise Bank – a rate that is higher than the 6.06% rate available two weeks ago with Cynergy. But the rest of the field is still paying 6.05%, so no change there.
3 Years
There’s been far less excitement in the 3-year table although the top rate on offer has increased from 6.01% to 6.05% thanks to a new bond introduced by Recognise Bank.
Secure Trust Bank had also offered a bond paying 6.05% earlier this week, but it was only available for a couple of days and has subsequently been withdrawn.
The only other positive movement in the 3-year table is a new bond from Hodge Bank paying 6% - this means the average of the top five has now increased slightly over the last two weeks from 5.97% to 5.99%.
5 Years
The 5-year bond table is even more disappointing, with the top rate of offer now marginally lower than it was two weeks ago. Cynergy Bank was paying the top rate of 5.81% until earlier this week, but this bond was withdrawn, to be replaced by a lower paying issue of 5.75%. This leaves RCI Bank with the top paying bond as we head into the weekend, paying 5.80%.
All in all, pretty disappointing. But, even though the longer term bond rates are a little lower, 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 or even more than 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.
Unfortunately, with the exception of the 1-year cash ISAs, the momentum that we have been enjoying has also abated in the Fixed Rate ISA world.
1 Year
Having seen some great increases over the last few weeks, it was good to see a few more increases to the best buy table over the last couple of weeks, although we’ve also seen some withdrawals and decreases.
Charter Savings Bank was the first to increase what it was offering with a new ISA paying 5.72%. But Virgin Money made a bigger move, taking the top spot with a new ISA paying 5.76% - leapfrogging Paragon which was still offering 5.75%. Hodge was the next to get involved but matched the 2nd place Charter ISA paying 5.75% rather than challenging the top place, and this was later withdrawn and replaced with a lower paying rate of 5.72%.
So, it is was great to see earlier this week, that UBL UK has returned to the best buy table with a market leading rate of 5.77%.
2 Year
The news isn’t as good in the 2-year table, with the top rate on offer falling from 5.90% with NatWest and RBS, to 5.75% with the recently returned UBL UK.
And while Kent Reliance and Hodge Bank increased the ISAs they had on offer to 5.71%, Hodge has subsequently reduced what it is offering to new customers to 5.65%, which sees it just hanging onto the bottom spot of the table.
3 Year
The 3-year ISA table has had a similar fate, with the top rate from Secure Trust Bank paying 5.60% being withdrawn, leaving Zopa in the top spot paying 5.56%. And this is the case as we head into the weekend.
5 Year
Over five years, as you might expect the sentiment is similar but the top rate on offer has remained the same at 5.26% and as in the 3yr table, top rate is being offered by Zopa. The only other movements of note came from Close Brothers and United Trust Bank, both of whom launched 5-year ISAs paying 5.25% - so taking joint second place.
It’s been a while since we reviewed the top easy access cash ISA accounts but it’s worth a look as it’s been pretty positive, albeit not as exciting at the non ISA easy access market.
The good news is that the average of the top five has increased from 4.34% a couple of weeks ago, to 4.43% as we head into the weekend, helped by increases from Leeds Building Society, Coventry Building Society, Tesco Bank and a couple of increases from Newcastle Building Society, leaving it at the top of the table, with its Double Access ISA (Issue 1) paying 4.50% AER. Not as high as the non-ISA equivalent, but more than you’d earn if you pay tax on your savings these days.
Whilst there has certainly been a slowdown in the competition driving rates upwards, 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 is you are not earning as much as you can.
@savingschampion
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