The week in savings - w/e 3rd September

06/09/2021

 Tuesday 31^st August

Tandem kicked off a quiet day in the market, with the only significant moves of the day, increasing their fixed rate savings:

1 Year – 1.41% - new best buy

2 Year – 1.67% - joint top with Zopa

3 Year – 1.76% - joint top with Zopa

Wednesday 1^st September

DF Capital responded to Tandem’s move by going top of 1 Year Fixed paying 1.45% - the best rate in 2021.  They also increased their 120 Day Notice rate to 1.05% and launch a 90 Day Notice account at 0.95% - both best buys

NS&I announced its Premium Bond winners and shared figures showing that the amount saved in the Bonds grew by just over £900m in the month.  This is the first time for several months that the growth has been under £1bn and highlights a continued slowing of inflows into Premium Bonds.  Given the flows out of other products announced in Q1 results, this increases the likelihood that NS&I may need to raise rates if it is to meet its net financing target.

Secure Trust Bank take top spot on 1, 2 and 3 Year ISAs with new best buy rates of 0.81%, 1.02% and 1.22% respectively

Family Building Society reintroduce their Windfall Bonds back on sale.  The Bonds pay 0.10% interest but additionally offer a prize draw with 21 prizes available – 1 x £50k, 2 x £10k, 3 x £2,500 and 15 x £1k.  The draw is limited to 15,000 tickets with £10,000 the minimum investment.  These are a very popular alternative to Premium Bonds and easy access savings and sell out quickly every time they are introduced.

Thursday 2^nd September

Wesleyan pulled their fixed rate savings range from sale, which were best buys on launch and had been repriced to top of market positions, before falling down the tables.

Close increased their fixed rate savings with some new fixed rates:

1 Year - 1.20% (outside top 10)
2 Year - 1.55% (joint 6th)
3 Year - 1.65% (joint 5th)
5 Year - 1.72% (joint 3rd)
They also increased their 2 Year Fixed ISA to 1.10% - a new best buy!

Smartsave withdrew their 1, 2, 3 and 5 Year Fixed rates from sale after a strong run in the market

Charter Savings moved top of notice with two improved rates – 1.05% for 120 Day and 1% for 95 Day Notice.

Friday 3^rd September

Atom increased their fixed rates to take three best buy slots:

1 Year – 1.50% - new best buy

2 Year – 1.75% - new best buy

3 Year – 1.75% - 4^th

5 Year – 1.86% - new best buy 

Paragon increased their 1 and 2 Year Fixed ISAs to 0.85% (joint 2^nd) and 1.06% (2^nd) and launched a limited edition easy access account paying 0.55% (joint 4^th)

Hodge moved top of 1 Year Fixed ISAs with an improved rate of 0.90% and joint 3^rd of 2 Year Fixed at 1.05%

Aldermore relaunch their double access easy access account paying 0.60% - the best in the market other than mobile app only based providers.

Zopa pulled back their fixed rates to

• 1 year to 1.36% (joint 5^th)
• 2 year to 1.56% AER (5^th)
• 3 year to 1.66% AER (4^th)
• 4 year to 1.71% AER (still best buy)
• 5 year to 1.76% AER (2^nd)

Chetwood Financial published their annual results for the year to 31^st March 2021, which show savings balances dropped from £212m to £160m during the year.  Their recent activity in the market is likely to have seen a significant increase in those balances.

Summary

Atom's moves on Friday were a suprise - particularly on 1 Year where some of those competing hard at the top of the tables had pulled back (Allica) or withdrawn (Smartsave).  With Zopa scaling back in the afternoon, it leaves just Tandem, DF Capital and Atom fighting it out at the top and will be interesting to see if there's a response this week.  I don't expect DF Capital to move but suspect Tandem may react - perhaps moving alongside Atom.

Much of the pricing competition was in the ISA space and 1 Year ISAs still look underpriced, even with Hodge moving top at 0.90%.  I expect that to be toppled and 1 Year ISA to move towards 1%.  Similarly, Close at 1.10% at the top of 2 Year looks underpriced and, with six providers paying 1% or more, expect one of them to move above this and 2 Year ISA rates to move higher still.

Aldermore's relaunch of its double access easy access account was a welcome move.  When Skipton pulled their 0.60% easy access account, the market could have gone either way with a pull back to 0.50% a strong possibility.  Leeds move to 0.55% helped support best buy rates staying above this level and with Aldemore and Paragon (0.55%) above 0.50%, that's six providers north of that marker and, while I don't see anyone topping Tandem at 0.65%, we could see providers move in to the gap between Aldermore and Tandem.

With many in the savings market back from holiday today, I expect it to be another busy week (although not the volatility of August) for product launches and rate changes, but with most of the action coming later in the week.