Savings round up - review of last week and predictions for this week
The savings market is probably the most volatile I have seen it in the 12 years I've been in the market. Rates are changing on a daily basis and often what feels like an hourly basis, as providers race to respond to movements from competitors. Here's our round up of the key movements last week and my predictions for the week ahead.
Last week saw another wave of rate cuts in the savings market. Here's a summary of the key changes impacting our best buy tables:
* BLME cut their best buy 1 Year rate from 1.25% to 1% and their 18 month rate was reduced by 0.15% to 1.15%
* Charter Savings withdrew their 1 Year 1.11% rate on Monday, replacing it later in the week with a 0.90% version and similarly their 1 Year ISA went from 0.95% to 0.75%
* Gatehouse Bank cut rates across their entire fixed rate bond range and their fixed rate ISA range
* Ikano Bank took 0.20% off their 1, 2, 3 and 5 Year fixed rates
* Investec Bank withdrew their 1, 18 Month, 2 and 3 Year Fixed Rates from sale
* Marcus by Goldman Sachs closed their online saver to new customers
* Paragon Bank reduced pricing on their fixed rates and ISA fixed rates as well as withdrawing their 40 and 120 Day Notice accounts from sale
* RCI cut its easy access rate from 1.05% to 0.90%
* Secure Trust Bank pulled their 60 day notice account from sale
* Shawbrook Bank cut 0.50% from their 120 Day Notice account
* Smartsave withdrew their 1, 2 and 3 Year fixed rates from sale
The only positive moves was the return of PCF Bank with a 1.12% 1 Year and a 1.26% 2 Year rate, although the 1 Year was withdrawn from sale on Friday evening, and Marcus entering the market with a new 1 Year. Priced at 1%, Marcus is unlikely to see a flood of new money but, the way the market is moving, we may well see that move up the tables quickly.
Looking ahead, I can't see much good news this week. With the movements of the past two weeks, Al Rayan Bank have moved to the top of the many best buy categories, having barely featured prior to that. Expect this to trigger cuts from them towards the end of this week. Atom Bank, having already cut rates twice in as many weeks, will be forced in to a third cut to their 1.15% 1 Year rate. Their 2 Year rate at 1.25% is moving up the tables too and I suspect this to get trimmed also. Reductions or withdrawals are also likely from PCF and Shawbrook's 2 Year rates.
Two weeks ago we had a cluster of banks paying around 1.50 - 1.60% for 5 Year money and I wrote then that I expected this to be enough to hold a headline rate around that level. All have withdrawn or cut rates and BLME's 1.60% rate is now 0.20% clear of nearest rivals RCI and UBL. I can't see this lasting and imagine BLME will have their eye on a cut to this later this week, and astonishing as it is to say this, we will see 5 Year pricing consolidate in the range from 1.30 - 1.40%. With NS&I paying 1.16% on their no notice Income Bonds, this leaves a staggeringly small margin between easy access and 5 Year and I can't see anything changing that in the short term.
I'm afraid it's set to be another week of falling rates for savers as we continue to wait for the bottom of the market. My advice to savers is secure the best rates as soon as you can.