Recent months have seen some competition finally return to the savings market, albeit not for everyone. A few providers have been fighting it out to reach the top of the 5 year fixed rate ISA and bond best buy tables. This is, of course, good news but where is the competition to help those with other savings needs? Or those who simply don’t want to lock up their money for the longer term.
The battle kicked off towards the end of August, when the best buy fixed rate bond from Secure Trust Bank (2.91%) was overthrown, firstly by Tesco Bank (2.95%) and then Shawbrook (3%). Secure Trust fought back with an improved rate (3.01%) in early September. But then Skipton and Leeds Building Societies entered the fray with top paying fixed rate bonds and fixed rate ISAs (all at 3%). Leeds then emerged on top with another improved offer, paying 3.05% gross/AER on both its Fixed Rate Bond and Fixed Rate ISA. The most recent moves have seen Secure Trust Bank fight back again with an improved rate of 3.11% on its 5 year fixed rate bond, only to be beaten again by a new participant, West Brom Building Society, who launched a 5 Year Bond and Fixed Rate ISA both at 3.15%, although these lasted less than a week. At the time of writing, Secure Trust and Leeds are back on top and FirstSave have joined in with a 5 Year Bond at 3.05% and a 7 year fixed rate bond at 3.50%, joining the only other 7 year bond on the market from Skipton (also 3.50%).
In an interesting new development, the last few weeks have seen the battle widen to the 3 year fixed rate categories with SAGA kicking things off with its competitive 2.55% rate, reducing the minimum from £50,000 to £1. Halifax then joined in with new fixed rate bonds and fixed rate ISAs at 2.50% with the ISA remaining at the top of the 3 year fixed rate ISA tables. Aldermore was the next provider to join in, launching the top 3 year fixed rate bond at 2.60%, followed closely by Close Brothers and Shawbrook (both 2.55%). Lloyds Bank and TSB Bank also increased their 3 year bonds and ISAs to 2.40% AER and although the rates weren’t good enough to trouble the leaders, it was still good to see a well-known high street name getting into the act for a change.
This is welcome in the current climate of rate cuts and historically low interest rates, although many rates are still below inflation and are simply very low considering the length of time you need to tie your money up for.
However it just goes to show that it really is about competition in the market, which has seriously been lacking for over a year now. But we need providers to up their game in more categories, such as variable ISAs and easy access accounts, as competition is key to push rates back up.