Savings News

Rate reductions and account withdrawals saw many of last week’s top rates no longer being available in the savings charts this week. Most notably, the overall top rate being offered on a five year fixed rate bond has been reduced, while both of last week’s top two easy access accounts have been withdrawn. For savers, this is a reminder that during this time of economic uncertainty it is important to act quickly to secure the best rates while they are available.

Last month, decades-long planning regulations were changed so that those looking to convert a commercial property into a residential one now no longer need planning permission. This change, combined with the fact that many commercial landlords are struggling to find business tenants and the continuing residential housing crisis, means that buying a commercial property and converting it into a residential one could be a good investment opportunity.

Although some top rates were withdrawn or reduced during the week, on the whole ISA savers will be pleased to see that many of last week’s chart-topping rates are still available. Overall, UBL UK continued to offer the best rate, with its long-term fixed rate ISA paying 1.40% AER. Savers looking for the flexibility of an easy access ISA will be disappointed to see that the top rate in this chart is only available to existing customers, while last week’s second-best rate is no longer available, resulting in Yorkshire Building Society offering the best rate on an easy access ISA without opening restrictions. 

It should be noted that the rates below are the best rates available at 11am on Thursday 22 October 2020 and, although correct at the time of publishing, they may not be available after this time.

The Consumer Prices Index (CPI) increased to 0.5% during September, up from 0.2% the previous month. This means that inflation has risen, which is largely thought to be due to the ending of the Government’s Eat Out to Help Out scheme that in turn saw restaurant and café prices increase.
Although inflation still remains significantly lower than the Government’s target of 2%, for savers facing a challenging market at the moment, this increase means the number of inflation-beating accounts has fallen by 217, down from 661 that could beat 0.2% last month to just 444 that can beat today’s rate of 0.5%.

Of the inflation-beating savings rates currently available on the market, 241 are fixed rate bonds, 106 fixed rate ISAs, 44 notice accounts, 29 easy access accounts, and just 24 variable rate ISAs.

Commenting on today’s inflation figures, Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Inflation may remain below the Government’s target, but it can still have eroding power on savers’ cash if they do not have it invested in an account that is paying them a decent return of interest. As an example, stashing cash with a high street bank’s easy access account would net savers just £1 a year in interest on a £10,000 investment, based on a rate of 0.01% with NatWest’s Instant Saver. In comparison, they could earn £96 within the first year with Coventry Building Society at 0.96%.

“There may well continue to be consumers who have amassed some disposable income over the past six months or so and are debating where to put their cash. A mix of easy access, short-term fixed and an ISA are all good choices to spread the investment, but it does entirely depend on how soon savers need access to their money. As it stands, savers may be concerned about the months ahead, so it is vital they are comfortable with locking their money away, and if they are not, easy access may be the most appropriate choice. As always, it is imperative they pick a lucrative offer and not leave their cash in an account that is being eroded by inflation.”