Rates Rundown 2 March 2017

02nd March 2017

Competition in the savings market heats up!

Competition between providers has been heating up over the last few weeks, with some of the best rates we have seen in the fixed rate bond market in nearly a year. In fact, in the last week we have seen the top 1 year fixed rate bond hit the 2.00% mark for the first time since March 2016. These are encouraging signs for savers and hopefully a period of sustained competition between providers will continue to push rates back in the right direction.

Continuing to make a name for itself with market-leading rates is Atom Bank, who stormed to the top of our Fixed Rate Bond Best Buy Tables with rates head and shoulders above the competition.

Staying with fixed rate bonds, Vanquis Bank launched new versions of its range, including a market-leading 4 year bond.

Also actively competing in the market at the moment is Secure Trust Bank, launching new best buy 1, 3 and 5 year fixed rate bonds. In addition, the provider has launched a market-leading notice account.

Elsewhere, as we start the countdown towards the new tax year in April, we have seen some activity amongst Fixed Rate Cash ISAs, with new best buys launched by three building societies, Darlington, Principality and Skipton.

Atom Bank launched new versions of its range of fixed rate bonds, each paying a market-leading rate. The 1 Year Fixed Saver now pays 2.00% gross/AER, the 2 year version pays 2.10% gross/AER, the 3 year pays 2.20% gross/AER and the 5 Year Fixed Saver pays 2.40% gross/AER. Accounts can be opened with a minimum of £50 through the provider’s app, via a mobile device.

Whilst the application process may not be familiar to all savers and some may be wary of using an app for their savings, these interest rates are a compelling reason to try it out. These are some of the highest interest rates we have seen in nearly a year and sit significantly ahead of the competition.

Having claimed top-spot back from their challengers, Atom Bank has once again thrown down the gauntlet, inviting them to improve their own rates, something that will only benefit savers going forward.

Filling the only gap in the market left by Atom Bank, the new 4 year fixed rate bond from Vanquis Bank pays a market-leading rate of 2.06% gross/AER and can be opened online, with a minimum of £1,000. The provider also features in our 5 year fixed rate bond best buy table with a rate of 2.16% gross/AER.

Secure Trust Bank has launched new best buy 1 year, 3 year and 5 year fixed rate bonds. The 1 year fixed rate bond pays 1.61% gross/AER, the 3 year bond 2.00% gross/AER and the 5 year bond 2.20% gross/AER. Accounts can be opened online with a minimum of £1,000 and are available to both business and personal customers. Interest is paid to a nominated bank account and cannot be added to the bond.

Second only to Atom Bank for each of the new bonds launched, Secure Trust Bank represents the next best option for those savers looking for an alternative. Whilst the rates are significantly lower, the accounts do offer an online application process, which is perhaps more familiar to many savers.

However, Secure Trust Bank are market-leader in their own right when it comes to notice accounts. The new 90 Day Notice Account (Issue 4) pays 1.34% gross/1.35% AER and can be opened online with a minimum of £1,000. Withdrawals can only be made after giving 90 days’ notice and you are restricted to 4 withdrawals of interest and 3 withdrawals of capital per calendar year.

So, top of our Notice Account Best Buy Table by a significant margin of 0.15% and an encouraging move in an area of the market that is often neglected by providers. However, it is unusual to see a notice account that not only requires notice, but also restricts the number of withdrawals you can make in the year, so you may need to ensure that you plan ahead effectively, if you are interested in the account.

As we head towards the new tax year, a time that traditionally providers bring out some of their best cash ISA interest rates, we have seen an increase in activity over the last few weeks, with a number of new best buys launched.

Darlington Building Society launched a market-leading 2 year fixed rate cash ISA paying 1.25% tax free/AER. Accounts can be opened by post or in branch, with a minimum of £1,000. Withdrawals are allowed from the account but are subject to the loss of 180 days’ gross interest on the amount withdrawn.

Skipton Building Society launched a 3 year fixed rate cash ISA that is now joint top of our best buy table. The account pays 1.30% tax free/AER and can be opened in branch, by post or online, with a minimum of £500. Access to the funds is allowed on closure only, subject to 240 days’ loss of interest.

Principality Building Society also launched a new 3 year fixed rate cash ISA that is joint top of our table. The account pays 1.30% tax free/AER and can be opened online, in branch or by post, with a minimum of £500. You cannot make withdrawals, but can access funds by closing the account, subject to the loss of 270 days’ interest.

Cash ISA activity should increase this month and we are hoping to see more best buys launched soon, so watch this space and we will continue to keep you up to date with the latest news.

If you would like to discuss further options or would like any help with your savings, please get in touch. Our Bath-based savings experts would love to hear from you, so call us on 0800 321 3581. 

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