This week has seen some positive savings news in the form of a new entrant to the Easy Access Best Buy Table and the initial steps into the cash ISA market from a provider that has been more well known up to now for its fixed rate bonds.
Whilst there are still far more providers leaving the best buy tables than entering them, it is encouraging to see a few providers bucking the trend and giving us hope that there may be better news around the corner.
Elsewhere, as mentioned above, Halifax has lowered the rate on offer on its Help to Buy ISA, a market that it had dominated since the start of the scheme. Fortunately, there are still matching options available from other providers, so First Time Buyers will still be able to find a suitable alternative.
Paragon Bank launched its first Cash ISA accounts, available to existing customers only. The accounts launched are a 2 Year Fixed Rate Cash ISA, paying 1.65% tax free/AER and an Easy Access Cash ISA paying 1.00% tax free/AER. Both accounts can be opened online and accept transfers in from existing ISAs. The fixed rate ISA can be opened with a minimum of £500 and you are able to make withdrawals, subject to the loss of 180 days’ interest on the amount withdrawn. The easy access ISA can be opened with a minimum of just £1.
These are the first cash ISAs launched by this challenger bank and we are hoping that the rates are competitive when they launch more widely available versions. The early signs are encouraging as the 2 year fixed rate ISA is second only to Punjab National Bank (1.90% tax free/AER), though you can get much better elsewhere than the easy access ISA rate.
Challenger Banks, like Paragon Bank, have shaken up the savings market in the last few years, pushing rates up by introducing competition, particularly amongst fixed rate bonds. So far challenger banks have largely not been active in the cash ISA market, so hopefully this move from Paragon Bank will encourage others to follow suit and bring some much needed competition into this area.
Virgin Money has launched a new version of its Defined Access Saver. Issue 6 is paying 1.26% gross/AER and can be opened with a minimum of £1. There are two versions of the account, one which is opened and managed online and one which is opened and managed in branch or by post. Withdrawals are restricted to three per year, if you make four or more withdrawals, the rate will drop to 0.50% for the remainder of that year.
The previous version of this account was withdrawn over a month ago, so it is good to see Virgin come back into the market with an account that goes straight into our Easy Access Best Buy Table. The key point to be aware of is that withdrawals are restricted, so if you make too many, your rate will drop significantly. It is also worth noting that better rates are also available from the likes of RCI Bank (1.45% gross/AER) and Coventry Building Society (1.30% gross/AER).
Halifax has lowered the rate on offer on its Help to Buy: ISA from 4.00% to 2.50% tax free/AER for new accounts opened. Accounts can be opened online, in branch or by telephone, with a minimum of £1.
Having led the way right from the start of the Help to Buy ISA scheme in December 2015, Halifax seems to have decided to stem the flow of applications with a less competitive rate. The good news for First Time Buyers is that there are now alternatives on the market that match Halifax’s 4.00% rate, though this wouldn't have been the case earlier in the year.
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06th May 2016
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