1st July 2015 by Anna Bowes
The battle of the Challenger Banks is hotting up, where would we be without them? The fierce competition between the providers is great news for beleaguered savers and we hope that it will continue, with more market leading rates to come.
Here is a rundown of what has been happening in recent weeks:
We have seen various providers battling it out in the best buy tables and whilst there have been improvements made in both the Easy Access and Notice Account categories, most of the action has taken place amongst Fixed Rate Bonds.
Whilst some larger providers have made some positive moves, yet again savers have looked to the Challenger Banks for the best fixed rate deals on the market, in keeping with the general trend in the savings market in recent times.
The initial movements were made in the first few weeks of June by Charter Savings Bank, who firstly increased its 1 year fixed rate bond from 1.75% to a more competitive 1.91%. This was followed the next week with an increase to its 2 year fixed rate bond, improving from 2.00% to 2.16%, taking up second position in the2 Year Fixed Rate Bond Best Buy Table.
The next major piece of news was a set of improvements made by Vanquis Bank. The 1 year fixed rate bond was increased from 1.61% to 1.86%, the 2 year bond from 1.76% to 2.11%, the 3 year bond from 2.26% to 2.46% and the 5 year bond from 2.80% to 3.02%. These improvements, along with the 4 year fixed rate bond that was already top of its table (2.61%), meant that the provider was represented in the top 5 for each of the main fixed rate bond terms (1 to 5 years), the first provider to do so for well over six months.
However, Charter Savings Bank retaliated and made a second change in as many weeks to its 1 year fixed rate bond offering. The new release paid 2.00%, matching the Punjab National Bank, who had dominated the top of the table for a significant period of time. Up to this point, most of the action in the 1 year fixed rate bond table had taken place in the battle for second place, so it was good to see a provider aiming for the top.
As we approached the end of June, we witnessed a further flurry of new improved fixed rate deals, with Hampshire Trust Bank improving its 3 year fixed rate bond from 2.35% to 2.50%, taking a best buy rate and making it even better. Also Paragon Bank joined in, improving its 2 year fixed rate bond and taking it to second place in the table, the rate going from 2.00% to 2.20%.
In the very last day of the month, Secure Trust Bank entered the best buy tables with a new 2 year fixed rate bond paying 2.21%, which is currently second place in the table and a table topping 5 year fixed rate bond paying 3.03%. Whilst these rates are good news, interest must be paid annually to a nominated bank account, so you cannot benefit from compounded interest.
Also on the last day of the June, we finally saw the 2.00% barrier breached for a 1 year fixed rate bond, as United Trust Bank made a bid for the top. The provider improved its 1 year offering from 1.90% to 2.05%. This is the first time we have seen a 1 year bond paying higher than 2.00% in nearly a year, the last one being Kent Reliance (2.01%) back in August 2014.
Of course, with so many changes made in such a short space of time, it would be no surprise to see yet more changes in the best buy tables before the end of the week and some new market leading fixed rate bonds released, so watch this space.