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Five minute finance: Savings & mortgages

Five minute finance: Savings & mortgages

Category: Money

Updated: 14/06/2010
First Published: 14/06/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Since the start of June the savings market has been a hive of activity. Two thirds of all changes remain on fixed rates, with bonds requiring a two or three year commitment seeing the biggest cuts of up to 0.50%.

However, it hasn't been all bad news, with a handful of providers launching best buy fixed rate accounts.

The variable rate market has also seen more positive activity, particularly with online operated accounts where the lack of branch overheads is passed on to savers through higher rates. At 1.01%, the average rate for an online operated easy access account is nearly double the 0.54% average on a branch based account.

With the FTSE 100 being so volatile of late many savers are moving back to the security of cash savings. Figures released by Fair Investment Company this week show that in the last three months, deposits into its cash deposit accounts have increased by 275%.

Best buy bonds

In recent months Northern Rock has launched a range of competitive deals in order to maintain savers deposits after the loss of its 100% depositor protection. Its latest bonds are no exception, with the one year bond paying a market leading rate of 3.00%. Two, three and five year bonds are also available. Savers can invest up to £2 million into the bonds, with further additions permitted whilst the bond remains open. Earlier access is not permitted.

Short term bonds

Santander has launched a range of fixed range bonds for savers seeking a short term commitment. Rates vary depending on the amount invested. The one year bond pays up to 2.75%, while the 18 month bond pays up to 3.10%. A two year bond is also available paying up to 3.50%. Savers can invest up to £2 million into the branch based bonds. Once opened further additions and earlier access is not permitted.

The dreaded penalties

Savers yet to invest this years ISA allowance are being offered a rate of 2.00% from the Newcastle Building Society through its Access ISA. Between £1 and £5,100 can be invested into the ISA, which doesn't accept transfers in. Access to funds is available without notice or penalty.

Market leading mortgage deal

first direct has this week reduced both the rate and the fee on its lifetime tracker deals. Based on true cost, the lender is offering a market leading deal of 1.79% above bank base rate, currently 2.29% for borrowers with a 35% deposit. A £99 arrangement fee and £149 closure fee is payable. The deal is available to borrowers with a smaller deposit at a slightly increased rate.

ICICI on top

ICICI Bank UK has amended the rates payable on its fixed rate bonds and continues to offer many of the market leading deals across all terms. Rates include a one year bond paying 3.00% and a three year bond at 4.15%. Savers can invest upwards of £1,000 into the bonds, but once opened further additions and earlier access is not permitted.

Find the best savings rates for you - Compare savings accounts

Find the best mortgage rate - Compare best selling mortgages

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.