Derin Clark

Derin Clark

Online Reporter
Published: 25/03/2020

Over the last two weeks, the Bank of England has made two consecutive unexpected base rate cuts, with the last cut taking base rate to its lowest level in history. Just one week on from the last cut to 0.10%, average saving rates have already fallen. With the Bank of England due to make another base rate announcement tomorrow, we take a look at how saving rates have already been impacted and what the best deals are available for savers today.

How the base rate cuts impacted savings rates

Type of product Average gross rate on 10 March 2020 Average gross rate on 25 March 2020
Easy access 0.56% 0.53%
Notice account 1.03% 1.02%
One year fixed rate bond 1.16% 1.11%
Two year fixed rate bond 1.23% 1.16%
Five year fixed rate bond 1.55% 1.47%

Average rates on all types of savings accounts have fallen since 10 March 2020, the day before the first base rate cut was announced. The biggest average rate fall can be found in the fixed rate bond charts, with five year fixed bonds seeing the most significant fall of 0.08%, followed by two year fixed bonds seeing a fall of 0.07% and one year fixed rate bonds falling by 0.05%. ISAs have also seen average rates decrease across all types of products.

Type of product Average gross rate on 10 March 2020 Average gross rate on 25 March 2020
Easy access ISA 0.84% 0.80%
Notice ISA 1.13% 1.11%
One year fixed rate ISA 1.13% 1.05%
Two year fixed rate ISA 1.19% 1.08%
Five year fixed rate ISA 1.46% 1.34%

As with the savings charts, the biggest drop in average rates can be found in the fixed ISA charts. Five year fixed rate ISAs saw the largest average rate fall of 0.12%, followed by two year fixed rates ISAs, which saw average rates fall by 0.11% and one year fixed rate ISAs saw the third-biggest fall with average rates dropping by 0.08%.

The reason for the fall in average rates could be due to a combination of providers reducing and withdrawing rates in response to the base rate cuts, as Eleanor Williams, finance expert at Moneyfacts.co.uk said: “There have been withdrawals and a drop in product numbers, which may be effecting that average rate. Hopefully, once providers have had a chance to assess, react to these unprecedented times, and reposition themselves in the market, then we would expect to see products launched again.”

While average savings and ISA rates have fallen, there are still some highly competitive rates available in the charts today. Saying this, with another base rate announcement due tomorrow, savers should act quickly to get these rates before they disappear. Williams added: “For those willing to shop around and keep a close eye on the top rate tables, there are still some competitive options available. Savers may want to consider some of the challenger banks and less familiar brand names or, if they are able to lock into a fixed rate account for a period of time, then that might be a route to secure the highest available returns. However, in an ever-evolving market, they would do well to act quickly and secure an account before it is withdrawn.”

What are the best savings rates available today?

The best fixed bond rates

In the fixed rate bonds chart, Gatehouse Bank offers the best rate overall with its Fixed Term Deposit paying an expected profit rate of 2.00% gross. This five year bond requires a minimum deposit of £1,000 to open and must be opened and managed online. Wesleyan Bank offers the best two year fixed bond rate of 1.67% gross. To open this account, a minimum deposit of £1,000 is needed and it can only be opened and managed online.

Three providers currently offer the top one year fixed bond rate of 1.55% gross. Hampshire Trust Bank pays this rate on its 1 Year Bond (Issue 32), which requires a minimum deposit of £1,000 to open. This account can only be opened online and then managed online, by post and by phone. Investec Bank plc also pays 1.55% gross on its 1 Year Fixed Term Deposit. Savers should be aware that to open this account, an Easy Access Account is needed for transactional purposes. It also requires a substantial minimum deposit of £25,000 to open. This account can only be opened online but can then be managed online, by phone and via mobile app. There is a version of this account that pays interest monthly at a slightly lower gross rate. United Trust Bank also pays 1.55% gross on its UTB 1 Year Bond, which requires a £5,000 minimum deposit to open. Again, this account can only be opened online but, once opened, it can then be managed by post and by phone.

 

The best easy access rates

Virgin Money pays 1.31% gross on its Double Take E-Saver Issue 14, which requires just a £1 deposit to open. This account allows unlimited further additions, but withdrawals are restricted to two per calendar year including closure. There is a version of this account that pays interest monthly at a slightly lower gross rate. The account can only be opened and managed online.

 

The best notice account rates

ICICI Bank pays the best notice account rate of 1.59% gross on both its HiSAVE Notice Savings Account and its Raisin UK – 95 Day Notice Account. HiSAVE Notice Savings Account is only available to new and existing HomeVantage Current Account customers. It requires a minimum deposit of just £1 to open and allows unlimited further additions. Withdrawals can be made but are subject to 95 days’ notice and must be made via a linked ICICI Bank current account. It can be both opened and managed online, in branch and by phone. Raisin UK – 95 Day Notice Account has no opening restrictions, but a £1,000 minimum deposit is needed. It allows unlimited further additions. It does not allow partial withdrawals, but savers can withdraw the full account balance subject to 95 days’ notice and account closure. This account can only be opened online and then managed online, by post and by phone.

 

The best ISA rates

Savers looking for an ISA will find the best rate currently comes from Paragon Bank, which pays 1.60% gross on its 5 Year Fixed Rate Cash ISA. This five year fixed ISA requires a minimum deposit of £500 to open and allows transfers in. It can be both opened and managed online and by post. There is a version of this ISA that pays interest monthly at a lower gross rate. Al Rayan Bank offers the best rate in the two year fixed ISA chart, with its Fixed Term Deposit Cash ISA paying an expected profit rate of 1.50% gross quarterly. This ISA requires a £1,000 minimum deposit to open. It can be both opened and managed online, in branch, by post, by phone and via mobile app, although savers should be aware that a token device is required to manage this account online.

Virgin Money pays the top one year fixed ISA rate of 1.36% gross on two accounts. Its 1 Year Fixed Rate Cash E-ISA Issue 421 has a term until 24 April 2021 and requires a minimum deposit of £1 to open. It can only be opened and managed online. 1 Year Fixed Rate Cash ISA Issue 442, which has a term until 15 March 2021 also requires just £1 minimum deposit to open. It can be opened in branch, by post or by phone and then managed in branch and by post. Both ISAs accept transfers in and offer versions that pay interest monthly at a slightly lower gross rate.

Al Rayan Bank currently offers the top rate in the easy access ISA chart. Its Instant Access Cash ISA pays an expected profit rate of 1.35% gross. This ISA requires a £50 minimum deposit to open. It allows unlimited further additions and withdrawals. Transfers in are also permitted. This ISA can be both opened and managed online, in branch, by post, by phone and via mobile app, although to manage this ISA online a token device is needed.

The best-paying notice ISA without any opening restrictions comes from Paragon Bank, which pays 1.31% gross on its 120 Day Notice Cash ISA – Issue 1. To open this ISA, a minimum deposit of £500 is needed. It allows unlimited further additions. Withdrawals can be made subject to 120 days’ notice, or if notice is not given, earlier access is allowed but subject to 120 days’ loss of interest. Transfers in are allowed. It can only be opened and managed online. There is a version of this ISA that pays interest monthly at a slightly lower gross rate.

The best savings and ISA rates

To see all the current savings rates visit our savings and ISA charts.

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.

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