🔔 Rates Rundown: best buy activity continues, pushing rates up across the board

Author: Anna Bowes
27th August 2020

This week’s Rates Rundown doesn’t just feature Fixed Rate Bonds – although there has continued to be some interesting developments there.

Cash ISAs have also had a bit of a surge in rate rises – and notice accounts are hanging on in there. It’s certainly been another positive couple of weeks.

As well as activity from banks such as Charter Savings Bank, Paragon, Aldermore and UBL UK, a brand new bank has launched some fixed rate bonds this week - and made its first appearance in our Best Buy Tables.

Fixed Rate Bonds

When we left the best buy battle for the top 1-year fixed rate bond spot last time, OakNorth had fought its way to pole position paying 1.21% AER.

OakNorth was, however, replaced by Charter Savings Bank in the top spot offering just a marginally higher rate of 1.22% AER but wasn't there for long. As both have since withdrawn these market leading accounts, the current leaders of the pack are Paragon and United Trust Bank, both paying 1.20% AER - still far better rates than were available not so long ago.  

And it’s not just the 1-year bonds that are seeing this competition – across all the terms the rates on offer from the top five have, on the whole, increased.

As we recently reported, Zopa – normally known for its Peer to Peer platform – has recently received a full banking licenceto allow it to offer cash savings accounts, alongside the Peer to Peer products. And this week it launched its first fixed rate bonds to the wider savings market.

With the exception of the 1-year bond, all the other terms made it straight into our best buys tables – mostly into 5th place although the 4-year bond actually shot into the top spot, However, things continue to move swiftly and Zopa has already been knocked down the list by Aldermore, which has increased its fixed rate bond offerings across the board.

It is always good to see new banks coming onto the market is it keeps competition alive.

Cash ISAs

Even cash ISAs have seen some competition recently, which is encouraging considering we are so far away from the ISA season.

Paragon and Charter Savings Bank have been quite active in this market as well as the bond market, especially on the short term fixed rate ISAs. The best 1-year Fixed Rate Cash ISA is now paying 0.85% AER (Paragon and Hampshire Trust Bank) – smashing the previous best buy rate of 0.71% from just two weeks ago.

Over 5-years UBL UK, which has already been dominating the table for weeks, increased the rate on offer on its 5 Year Fixed Rate Cash ISA to 1.40% from 1.21% AER, knocking United Trust Bank from the top spot.

Variable Rate Cash ISAs have been less active, although Paragon has launched a new restricted access easy access cash ISA (Triple Access Cash ISA – Issue 1) paying 0.80% tax free/AER - which goes into third place behind Cynergy and NS&I.

Notice Accounts

Although Secure Trust Bank withdrew its market leading 90 Day Notice Account which was paying 1.16% AER, a couple of new providers have made their way into the best buy table over the last couple of weeks – so now Allica Bank and Paragon are joint market leaders, along with BLME – paying 1.10%. Hopefully someone will come and knock them all of their perch soon as we want to see rates continue to rise.

So while there’s been no sign of a rise in the base rate anytime soon, as we approach the end of the summer it seems that competition between the providers is proving to be good news for those savvy savers who take some time to shop around.

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Rates correct at time of publication