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Lenders offer tempting fixes as Bank ponders interest rate rise

Lenders offer tempting fixes as Bank ponders interest rate rise
Date of Publication: Friday, 22 August 2014 12:07

Lenders are offering a range of improved fixed rate savings accounts to tempt customers into locking away their cash before interest rates begin to rise.

 

Building societies in particular are upping their game, launching a selection of competitive fixed-rate bonds and ISAs.

 

The Yorkshire Building Society Group is leading the way for shorter-term products, releasing a table-topping one-year deal across all of its brands this week.

 

Alongside with the Yorkshire BS, the Chelsea, Barnsley, and Norwich & Peterborough Building Societies have all launched a one-year fixed-rate ISA at 2.00%, which puts them at an equal market lead by some distance for this term.

 

Yorkshire’s deal, along with Norwich & Peterborough, can be accessed by branch or by post. Chelsea and Barnsley are both offering an e-ISA option, which is available online.

 

The one-year ISA/e-ISA bonds can be opened with a minimum of just £100, except in the case of Norwich & Peterborough, which requires a minimum deposit of £15,000.

 

But all of the accounts allow savers to transfer in their existing ISA pots, which is a plus for those with poor performing accounts.

 

Additionally, savers will be able to access their funds by closing the account at a loss of 60 days’ interest, which adds further flexibility.

 

Yorkshire Building Society

The Yorkshire BS Group has launched new market-leading 1 year deals.

 

For those who may be contemplating longer-term options, Secure Trust Bank has just launched new two-year and four-year bonds, which enter as the market leaders in their sector.

 

The two-year deal offers 2.33% per year before tax, while the four-year deal offers 2.92%.

 

And Tesco Bank has added to the competition for longer-term accounts, with an improvement in its five-year bond.

 

At 3.10%, the bond is equal with Aldermore, and trails only Vanquis Bank (3.16%), Shawbrook Bank, and United Bank UK (both 3.20%) for its term.

 

Editor’s View: Tread Carefully

It will doubtlessly offer some relief that savings rates are beginning to show signs of recovery.

 

The larger-than-expected fall in inflation to 1.6% in July means that savers are more likely to beat inflation, even with shorter-term accounts.

 

But it seems little coincidence that these products have appeared just as the first signs emerged of a possible Bank of England interest rate rise.

 

Two members of the Bank’s Monetary Policy Committee voted to increase rates this month, the minutes revealed, marking the first split over the decision in three years.

 

The fall in inflation will ease the pressure on the committee for now, but the events come as a warning to savers that they should think carefully before locking their money away for any substantial period of time – especially when there are inevitable interest rate rises to come.

 

Keith McDonald

Which4U Editor

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Friday, 22 August 2014 12:07
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