Savings Rate Rundown
Here are some of the latest movements in the market.
As mentioned above National Savings and Investments (NS&I) will be withdrawing its Guaranteed Growth Bonds paying 2.80% for 1 year and 4% for 3 years, at midnight on Friday 15th May. You can apply online or by telephone, so there is still a small window of opportunity to apply.
Secure Trust Bank has launched a new 120 Day Notice Account (Issue 13) paying 1.85% gross/1.86% AER. It is worth noting that you are restricted to 4 withdrawals of interest and 3 withdrawals of capital per calendar year.
So, a new table topping account has been launched in the notice account category and again it is from a challenger bank, further demonstrating this type of provider’s dominance of this area of the savings market. The number of withdrawals you can make in a year is restricted, so the account may not be suitable for everyone. However, if you do not need regular access to your funds or are in position to plan withdrawals carefully throughout the year, it may be worth a look.
Hampshire Trust Bank has recently increased the interest rate on its 90 Day Notice Account (Issue 6) from 1.40% to 1.60% for both new and existing account holders and now appears in our notice account best buy table.
After an absence from the best buy tables in recent times, Hampshire Trust Bank is back with this interest rate increase. Most welcome of all is the fact that existing account holders will also benefit, which is unusual in today’s savings market, as many providers are continuing to do the opposite, cutting rates for existing account holders.
We have also seen a group of providers recently increasing the fixed rates they have on offer for new accounts opened and whilst these are not necessarily market leading, they are at least a step in the right direction.
Secure Trust Bank has also launched two new fixed rate bonds, both paying market leading interest rates for the respective terms. The Fixed Rate Bond 5 Year Term (Series 18) is paying 3.01% and the Fixed Rate Bond 7 Year Term (Series 17) is paying 3.11%. It is worth noting that the interest cannot be compounded, so the overall return over five years would be higher on the next best bonds (3%) and on the only other 7 year bond on the market (FirstSave 3.10%).
FirstSave has launched a 1 Year Bond 29th Issue paying 1.90% and a 2 Year Bond 19th Issue paying 2.15%. Both accounts now appear in our best buy tables.
Kent Reliance has replaced its range of fixed rate bonds with higher paying versions. The 1 year fixed rate bond is paying 1.85% (the previous version was paying 1.75%) and the 2 year fixed rate bond is paying 2.10% (the previous version was paying 1.85%). Both accounts are now positioned within the top five for their respective terms.
United Bank Ltd has also replaced its 1 year and 2 year fixed rate bonds with higher paying versions. The 1 year fixed rate bond pays 1.75% (the previous version was 1.50%) and the 2 year fixed rate bond pays 2.15% (the previous version was 1.90%). The increased 1 year bond is not paying a high enough rate to make it into the top five, but the 2 year bond sits at position 4 in the table.
Skipton Building Society has increased the rates on its Fixed Rate Bonds and Fixed Rate ISAs, for new accounts opened. The fixed rate bonds have been increased by up to 0.20%, now ranging from 1.60% for 1 year to 2.10% for 5 years. The largest change amongst the fixed rate ISAs has been 0.07% and the rates now range from 1.62% for 1 year to 2.10% for 5 years. The pick of the bunch is the 1 Year Fixed Rate ISA, which is paying 1.62% and makes it into the best buys.
Whilst these are not market leading rates, a number of these accounts made it into our best buy tables. Some of these providers may be lesser known names, but as we have seen, this is the type of provider that is driving competition in the savings market. Savers may be reluctant to look at providers that they are less familiar with, but provided they have the same FSCS protection and regulation in place, funds are protected in the same way and so this should not be a barrier.
However, not all providers have been improving the rates on offer and like other High street providers in recent weeks, Santander has withdrawn its fixed rate bonds and replaced them with lower paying versions. The 1 year bond is paying 0.90% (previously 1%) and the 2 year bond is paying 1.15% (previously 1.25%). The 123 exclusive versions have also been lowered from 1.25% to 1.15% for the 1 year bond and 1.50% to 1.40% for the 2 year bond.
So, like Halifax and Lloyds before them, Santander is the latest big name to lower its fixed rate bond range, taking them even further away from the best buy tables. What is particularly galling is that the rates were uncompetitive to start with and have been made even worse.
Santander has also in the last week withdrawn its range of fixed rate and variable rate ISAs and replaced three of the four accounts with lower paying versions.
The 123 2 Year Fixed Rate ISA paying 2%, available to 123 current account and credit card customers, along with Santander Select customers, was replaced with a new version paying 1.65%. The 2 Year Fixed Rate ISA, available to all was paying 1.50% and was replaced with a new version paying 1.40%
With the variable rate ISAs, the Direct ISA Saver (Issue 10) paying 1%, was replaced by Issue 11 paying the same rate. However, the 123 exclusive Direct ISA Saver (Issue 10) paying 1.50% was replaced with Issue 11, at a lower rate of 1.25%.
Meanwhile, Halifax has made further changes and replaced its ISA Saver Variable with a lower paying version for new accounts opened. The previous version was paying 1% and the new version is paying 0.80%.
Bank of Scotland also reduced the rates on its ISAs for new accounts opened. The Fixed Cash ISA – 1 Year is now paying 1.15%. The Fixed Cash ISA – 2 Year is 1.40% and the Fixed Cash ISA – 3 Year is 1.50%. The variable Access Cash ISA paying 1% has been replaced with a new version paying 0.80% for new accounts opened.
Another high street name, Lloyds Bank has also reduced the rates on its ISA range for new accounts opened.
The Two Year Fixed Rate Cash ISA was paying 1.20% on balances up to £40k+ and 1.60% on balances above £40k, the lower tier is unchanged, but for balances above £40k+ the rate has gone down to 1.40%. The Three Year Fixed Rate Cash ISA was paying 1.30% on balances up to £40k+ and 1.70% on balances above £40k, again the lower tier is unchanged, but for balances above £40k+ the rate has gone down to 1.50%.
In addition its variable Cash ISA Saver paying 0.80% on balances up to £40k and 1% on balances above £40k has been replaced with a new version paying 0.75% and 0.80% for new accounts opened.
An interesting set of changes from some of the UK’s most well-known providers, as it appears to end Santander’s involvement in the ISA season and further reinforces the trend of high street providers taking themselves even further away from the best buy tables. The new rates on offer are way off the pace, even for Santander’s 123 account customers. Very few of the top accounts on the market are available on the high street at the present time and this situation shows no sign of stopping in the near future. The good news for savers is that better rates can be found elsewhere, but they will need to look at some lesser known names for a better return.