Marcus and Coventry top easy access savings
Yesterday, Coventry Building Society and Marcus both increased their easy access rates to 0.50%. Coventry did so via a new limited access account whichs savers can only make six withdrawals a year from. After this, a charge of 50 days interest will be made. Marcus have achieved this rate by reinstating a 12 month bonus, which was in place when the account was launched, for both existing and new customers of 0.10%.
Both join Charter Savings at the top of our easy access best buys alongside Charter Savings. Of the two, the Coventry account is likely to have wider appeal as it is available via branch, post, telephone and internet, whereas Marcus is online only. For existing Marcus customers, there's also the need to log in to their account and opt in to the bonus.
The increases are significant for the savings market. As a result of the NS&I rate cuts announced in September 2020 (implemented in November 2020), we’ve seen £bns of savings flow in to the market which has pushed rates down from the best buy 1.31%, which was available on 1 Year, to a low of 0.56%. Easy access rates dropped similarly from the 1% available, prior to the rate cut announcement, to 0.40% at its low. Whereas 1 Year rates have improved since April, with four providers now paying 1% or more, easy access rates haven’t really budged from the lows they reached. 0.40% has remained where most best buy providers are clustered. Paragon initially broke from this group to pay 0.41% and Atom went briefly to 0.50%, but cut this back quickly last week to 0.35%. Charter Savings went top of market paying 0.50% in mid June but, we're it not for these moves, I expect that rate will have lasted another week at most.
As Marcus and Coventry have big balance sheets, circa £21bn and £36bn respectively, they can cope with the inflows which will come in from savers at these rates. This means they can sustain a period of time at the top of the market and this, I believe, will force other providers to match or better their rates to see any meaningful take up of their products. With six providers paying 0.40% and Paragon at 0.41%, I do expect to see increases to other easy access rates very soon. Investec have already moved from 0.40% to 0.45% this morning and I think we will see more providers increase rates in the gap between the cluster around 0.40% and 0.50%. I also expect others to match the 0.50% on offer and possibly one or two providers to briefly breakout above that. I don’t see rates going above 0.55% though, so I would recommend savers grab these deals when they come available.
Paragon, RCI Bank and Shawbrook have all been mainstays in the easy access best buys and I anticipate at least one of these will respond to these moves. What is certain is that this is good news for savers and will see, at least short term, an increase in easy access rates.