Savings rate summary from the savings team

27th June 2014

There has been a smattering of improved variable rate deals since our last newsletter, which is a welcome but all too rare sight in the savings market at the moment. May saw Tesco Bank improve its Internet Saver from 1.20% to 1.35% gross/AER, which is one of the best easy access rates on the market, particularly when you omit accounts with a limited number of withdrawals and those open to existing customers only. Then right at the end of the month, GE Capital Direct increased its GE Saver Issue 6 from 1.10% to 1.30% gross/AER, to sit just below the current easy access best buys. Interestingly, this change benefited both new and existing account holders, which is very rare at a time when providers are all too willing to cut the rates of existing accounts.

In June, Britannia launched a new issue of its Select Access Saver, which at 1.65% was an improvement on the market leading 1.50%. Finally, Virgin Money improved its Easy Access Saver from 1.10% to 1.30%.

Whilst these improvements to variable rates would hardly constitute a trend and it would be premature to get too excited about them, these accounts are a step in the right direction. Hopefully other providers will follow suit and improve the rates they have on offer in the coming weeks and months.

Apart from the changes above, the main improvements we have seen have been among fixed rate bonds, albeit from a select few providers. Vanquis started June with 3.01% for its 5 year fixed rate bond, which was improved to 3.06% on the 6th June and has improved again to a market leading 3.11%. The same day, Aldermore reappeared at the top of the best buy tables after a long absence with best buy 3 year (2.70%) and 4 year (2.90%) bonds and a 5 year bond that sits just below the market leader at 3.10%. We have also seen improved 1 year fixed rate bonds this month from FirstSave (1.88%), BM Savings (1.75%) and Investec (1.75%). All of this is good news for those looking for better rates and hopefully more providers will get involved in the battle, to force rates up even further.

Now that the initial flurry of ISA activity is over for many this tax year, Halifax wasted no time in making significant reductions to the rates on offer for those yet to act. The 1 year, 18 month, 2 year, 3 year and 4 year fixed rate ISAs were all competitive before the change, but now significantly better rates can be found elsewhere. The ISA Saver Online and ISA Saver Variable were also reduced and went from competitive to poor in one fell swoop. Santander also reduced the rates on offer for its 2 year fixed rate ISAs and easy access ISAs, as more and more providers seem to be shutting up shop before the new allowance comes into effect on the 1st July.

Having said that, Virgin has launched new 1 year (1.76%), 2 year (2.10%), 3 year (2.25%) and 5 year (3%) fixed rate ISAs that are all best buys. Hopefully Virgin will be the first of a group of providers offering better ISA deals to those looking for a new home for their larger ISA balances and then we may see some better rates for those who have either put off paying into an ISA this tax year or are looking to transfer their existing ISAs.

Whilst the general lack of activity amongst ISAs is disappointing (apart from some notable exceptions), the improvements in the fixed rate bond category could perhaps be a sign that more providers may start to increase the rates on offer in the coming weeks and months. So, watch this space as we continue to let you know about improved offers via our Rate Alerts Service, register now for free, if you haven't done so already.

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