The week in savings - w/e 17th September
Monday 13th September
The week started with Pennyworth Financial announcing they have completed the pre-application process for their authorisation as a bank, which they started in June 2020, and are now preparing to submit their banking licence application. They hope to be authorised as a UK bank next year. Pennyworth have also launched a new version of their mobile banking app, on Apple and Android, and begun their initial seed fundraising round.
Beehive Money was relaunched by The Nottingham Building Society. It previously entered the market in 2019 with a best buy easy access account paying 1.50%. Now, it is a standalone brand and mobile app offering a Lifetime ISA (paying 0.50%), easy access ISA (0.35%) and easy access account (0.05%). Its ISA rates are competitive, but the easy access rate is dreadful. It’s a good app and worth looking at for ISA savers, particularly those looking to save in a Lifetime ISA, but best avoided for ordinary savers until the easy access rate is improved or new accounts are added.
The first rate changes of the week came from Zopa, who cut their long term fixed savings ates:
4 Year - 1.55% - taking them down to 5th in market
5 Year - 1.65% - joint 9th
DF Capital announced they had increased the amount which can be saved in their savings accounts from £85,000 to £250,000.
Tuesday 14th September
The only move of the day saw Secure Trust Bank withdraw their 0.95% 1 Year Fixed ISA, which was best buy, promoting Hodge (0.90%) to top spot
Wednesday 15th September
For the first time in several weeks, there were no changes!
Thursday 16th September
Hodge kicked off the day with some fixed rate ISA changes:
1 Year Fixed ISA - down to 0.80% (now joint 5th)
2 Year Fixed ISA - up to 1.15% (joint best buy)
Secure Trust Bank withdrew their market leading 2 and 3 Year Fixed Rate ISAs, which moved Hodge up to outright top on 2 Year (1.15%) and UBL to the summit of 3 Year (1.21%)
Aldermore Bank reported strong financial results for the year to 31st June 2021 highlighting customer deposits increasing 14% in the period to stand at £12.4bn (up from £10.9bn as at 30th June 2020 and £11.5bn as at 31st Dec 2020)
Friday 17th September
An unusually quiet week for savings rate changes saw more action on Friday than the whole of the rest of the week combined. Aldermore kicked things off by increasing their fixed rates:
1 Year - 1.27% (8th in market)
2 Year - 1.30% (outside top 10)
3 Year - 1.35% (outside top 10)
4 Year - 1.45% (7th)
5 Year - 1.50% (outside top 10)
BLME also increased their fixed rates, having slipped out of our best buy tables, to move back in:
1 Year - 1.35% (4th)
18 Months - 1.45% (joint 3rd)
2 Year - 1.60% (4th)
3 Year - 1.65% (joint 6th)
4 Year - 1.65% (2nd)
5 Year - 1.70% (joint 6th)
Paragon Bank withdrew their 1 Year Fixed ISA, which was joint top at 0.85%.
PCF Bank withdrew their 2 and 3 Year Fixed rates from the market and cut their 1 Year from 1% to 0.80%.
JP Morgan announced that their new bank ‘Chase’ will launch in the UK next week. Initially, it is expected to offer a digital current account only, with a rewards programme. I don’t expect to see any savings products as part of the launch, but it will be interesting to see if Chase can compete with the incumbent high street banks and the likes of Monzo, Starling and Revolut. RBS’ attempt (called Bo) at a standalone digital bank failed miserably and was quickly wound down last year after only six months.
Tandem made the last change of the day, with a strange out of hours move, cutting their 0.65% easy access rate to 0.55% at 5.25pm.
The last news of the day was that Recognise Bank have exited mobilisation. Having been authorised (with restrictions) in November 2020, they are now fully authorised and can accept deposits. Expect it to take them a couple of weeks to launch but we should see them enter the savings market in October with a range of fixed term savings products and possibly some business savings accounts too.
After a volatile six weeks, the savings market was quiet last week. I expect next week to be busier (it will be difficult to be quieter!) but interest rates are clearly stabilising, and the froth has come out of the fixed rate market.
I expected that ISAs rates may have had a little further north to go but this week’s rate cuts on ISAs makes this look unlikely, particularly on shorter fixed terms. There may well be some higher rates to come on longer term fixed rates but anything that beats the current 1 Year (0.85%) and 2 Year (1.15%) should be snapped up.
Tandem cutting its rate for new customers to 0.55% is likely to have limited impact on the easy access rate market. Chip (with Allica Bank) lead the way at 0.70% but there’s plenty of competition between 0.50% and 0.60%. I think we will see at least one provider move in to the gap between 0.60 – 0.70% before the month is out.