Things have really kicked off over the last couple of weeks and this week’s Rates Rundown has been tricky to write as there have been so many changes to the best buy tables that it’s been hard to keep up. But, we’ve tried to provide a good summary of all the action in the easy access and fixed rate bond tables – and most importantly, how high savings rates have climbed to date!
RATES ARE CORRECT AS AT THE TIME OF PUBLICATION (Midday 23/06/2023). All up-to-date rates can be found on our Best Buy tables.
Let’s start with the Easy Access table. The April inflation figures signposted that there would be another base rate hike at the meeting that took place on 22nd – and as we now know that absolutely was the case. In fact, it was increased by more than most analysts had been expecting – up to 5% from 4.5%
When I finished my last Rates Rundown, we were excited as The West Brom Building Society was the first non-tracker account that we have seen in our tables paying 4%, although this was the restricted access Double Access Account (Issue 2). Coventry Building Society was the next provider to join the 4% club with another restricted access account, although as the name – Four Access Saver (Online) – suggests, this allows double the number of penalty free withdrawals. When the West Brom withdrew its account at the beginning of this week with no further challengers, we feared that things may have run the course, but how wrong we were. The following day the table had transformed from one where just the top account was paying 4% - to a table where ALL the accounts were paying 4% or more.
Principality and Sainsbury’s Bank were the first to increase the rates to more than 4%, with both providers raising the rates on their Double Access Account accounts to 4.01%. And then Chip and GB Bank (via Raisin) increased their non-restricted accounts to 4% before all of them being trumped by Tandem, who increased the underlying rate on the Instant Access Savings Account to 3.75%. With the top-up rate of 0.35% this takes the overall rate to 4.10% AER.
Oxbury Bank was the next to make a move for the top spot, in fact increasing the rate on its Easy Access Account Issue 1 twice in one day – firstly to 4% from 3.90% then up to 4.11% to take the top spot from Tandem.
Unfortunately for Oxbury, it wasn’t to stay in this lofty position for long as the Principality increased the rate on the Double Access Account Issue 2 to 4.15% AER. However, it should be noted that there are very strict access conditions on this Principality account. You can make only two withdrawals per calendar year, which includes closure. If you do not close the account on your second withdrawal, unless there is a rate cut to the account you cannot access you cash again until the following calendar year!
The good news is that as we end this week, GB Bank (via Raisin) has upped the rate on its unrestricted easy access account, also to 4.15% - so there’s plenty to choose from paying more than 4%.
With the base rate at 5%, the Bank of England is a very good place for savings providers to stash their extra cash, as they will earn this rate – whereas even the top easy access accounts are paying less. So, while we have already seen some really strong competition in this sector, could there be even more to come?
In order to illustrate just how busy and competitive, I started off by trying to provide a timeline, but you’d still be reading this until next week. Instead, I’ll summarise some of the highlights. And I’ve had to make a cut off time – to stop making changes, so please refer to the best buy tables for the latest information.
All was calm immediately after the weekend but there must have been something in the water on Tuesday 13th June, as it really kicked off.
1 Year
Close Brothers was the first to make a move although not challenging the top spot. Instead it entered mid table with a bond paying 5.30% leaving Smart Save in its favourite place at the top paying 5.31% AER
Smart Save must have sensed that something was afoot as it launched a new bond paying 5.36%, beating itself!
But OakNorth decided it wanted to lead the way and launched a new bond paying 5.37%.
Of course that put Smart Save’s nose out of joint and as expected, the provider retaliated by launching its second bond in one day, this time paying 5.38%.
Then, as we thought it was all over for the day, Zopa swooped in at close of play with a bond also paying 5.38% - also an online account but with a lower minimum deposit f £1,000 so it went straight to the top.
It was then that Atom Bank snuck in with some night-time manoeuvres – launching a market leading 5.40% 1-year bond at midnight!
The rate makers at Smart Save must have been furious as by 10.37am it was all change again as Smart Save’s latest offering was launched paying, you guessed it, 5.41%, once again pushing OakNorth into dangerous territory. So it upped its offering to 5.42%. But like a bidder at an auction, Smart Save was determined to keep its place and edged up its rate to 5.43% AER at which point things calmed a little for a day. But by the end of that week (16th June) Allica Bank dared to challenge with a bold increase up to 5.51% but Smart Save was just not letting go so pushed up to 5.52% - ending the week at the top.
Last week kicked off with a challenge from Ahli Bank via the Raisin platform, launching a bond paying an extraordinary 5.70% AER and while a number of challengers such as Close Brothers, OakNorth, Oxbury, United Trust Bank, Allica, Charter Savings Bank, Atom, Investec and of course Smart Save jostled for the remaining spots, regularly changing places. But none pushed Ahli Bank off the top spot until Thursday when Smart Save got fed up with playing 2nd, or even 3rd fiddle. As we end the writing of this Rates Rundown, Smart Save was there paying 5.71% and the average of the top five was 5.69%.
Just to reiterate, two weeks ago the top rate was 5.31% and the average of the top five was 5.26% - an increase of 8% in such a short time is extraordinary – and exhausting for the rate team here at Savings Champion!
2 Years
It’s been a similar story in the 2-year table with the turnover of the bonds in the table regularly all changing in the space of a day! I can’t remember this happening before – certainly not in Savings Champion’s history.
The bottom line is that whilst the top 2-year bond was paying 5.31% two weeks ago (the same as the top 1-year bond) at the time of writing, the top rate is now 5.70%, with Close Brothers - so actually slightly less than the top 1-year.
Whilst the action has been frenetic over the last two weeks as a whole, the last couple of days really helped push things along with the usual suspects, Atom Bank, OakNorth, United Trust Bank, Charter Savings Bank and Close Brothers all increasing their rates on Thursday pushing the top rate on offer from 5.59% to 5.70% in just one day! Smart Save has kept a bit of a lower profile for this term and is currently not even in the top five, although it has made five increases over the course of two weeks.
What is interesting about the pricing of the fixed rate bonds at the moment, is that it’s the short, 1-year terms that are really pushing for it, although there are some anomalies which we’ll get to shortly!
3 Years
The 3-year table has been a little quieter in terms of activity, but as we ended the week a shock rate from Recognise Bank means that you can now earn 5.85% on a 3-year bond! Once again the top rate was just 5.31% two weeks ago.
Surely, even though inflation is proving to be very hard to reduce, if you are locking away for three years, there must come a point that you’re earning more than inflation for at least some of the term?
Smart Save and Investec (exclusively via Raisin UK) had been jostling for the top spot for most of last week, so will either be tempted to take on Recognise Bank. Check our best buy tables to keep an eye on the action.
5 Years
There’s less to report on this table, although once again the top rate on offer has improved from 5.35% a couple of weeks ago (so higher than the shorter term rates) to 5.55% at the time of writing, which once again is lower than the top short term fixed rates.
Although the latest inflation figures have clearly made the market think that the base rate will be raised to higher than previously expected, the way the pricing of the bonds is positioned at the moment, does indicate that base rate will peak and then fall somewhat. When and by how much? We’ll just have to wait and see.
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