ISSN 2631-570X (Online)

14 January 2020

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AER	£1K	£5K
CASH ISAs
Easy Access	-	-
Notice Variable	-	-
1 Year Fixed	-	-
2 Year Fixed	-	-
3 Year Fixed	-	-
4 Year Fixed	-	-
5 Year Fixed	-	-
Lifetime ISAs	-	-

AER	£10K	£50K
VARIABLE RATES
Easy Access	-	-
1 Month	-	-
3 Months	-	-
3 Months +	-	-

AER	£10K	£50K
FIXED RATES
1 Year	-	-
1 Year	-	-
2 Year	-	-
3 Year	-	-
4 Year	-	-
5 Year +	-	-

AER	£10K	£50K
OFFSHORE ACCOUNTS
Variable	-	-
Fixed	-	-

AER	£10K	£50K
BUSINESSES Charities, Clubs, Pension Funds, Client A/cs etc
Variable	-	-
Fixed	-	-

AER	£25pm	£100pm
REGULAR SAVINGS
Variable	-	-
Fixed	-	-
ISA	-	-

AER	£100	£1K
CHILDRENS ACCOUNTS
Variable	-	-
Fixed	-	-
JISA	-	-

Full list of Guides

This week, Ikano Bank increased the rate on its one-year fixed rate bond. Fixed 1 Year Saver pays 1.66% on its anniversary on an opening minimum deposit of £1,000. This bond allows further additions within 14 days of the account opening, but withdrawals are not permitted. It can only be opened online, but can then be managed by phone and online. For those looking to supplement their income, there is also a version
of the bond that pays interest monthly at a slightly lower
gross rate.

New competitive bonds

Secure Trust Bank has launched one, two, three, four and five-year bonds this week resulting in many becoming competitive for their terms. 1 Year Fixed Rate Bond pays 1.65% yearly until 15.02.2021, 2 Year Fixed Rate Bond pays 1.86% yearly until 14.02.2022, 3 Year Fixed Rate Bond pays 1.96% yearly until 14.02.2023, 4 Year Fixed Rate Bond pays 2.02% yearly until 14.02.2024, and 5 Year Fixed Rate Bond pays 2.12% yearly until 14.02.2025. All these bonds require an opening minimum deposit of £1,000. They allow further additions within 30 days of the account opening, but do not permit withdrawals. These bonds can only be opened online and then managed by phone and online.

At the same time, Secure Trust Bank has launched one, two, three, four and five-year fixed ISAs this week. 1 Year Fixed Rate Cash ISA pays 1.40% yearly until 15.02.2021, 2 Year Fixed Rate Cash ISA pays 1.60% yearly until 14.02.2022, 3 Year Fixed Rate Cash ISA pays 1.70% yearly until 14.02.2023, 4 Year Fixed Rate Cash ISA pays 1.80% yearly until 14.02.2024 and 5 Year Fixed Rate Cash ISA pays 1.90% yearly until 14.02.2025. All these ISAs require a minimum deposit of £1,000 to open. They allow further additions within 30 days of the account opening. Earlier access is permitted on closure only and subject to 90 days’ loss of interest on the one-year version, 180 days’ loss on the two-year option, while the three, four and five-year versions are subject to interest penalties of 210, 230 and 270 days respectively. Transfers in are only allowed from cash ISAs, while transfers out are permitted but subject to the same interest penalty as earlier access. These ISA must be opened online but can then be managed by phone and online.

Bond rate increased

This week, SmartSave increased the rate on its one-year fixed rate bond. 1 Year Fixed Rate Saver now pays 1.66% on its anniversary on an opening minimum deposit of £10,000. This bond allows further additions within 14 days of the account opening, but withdrawals are not permitted. It can only be opened and managed online.

Easy access ISA rate rise

This week saw Leeds Building Society increase the rate on its easy access ISA. Limited Issue Online Access ISA (Issue 16) pays 1.30% on maturity on an opening minimum deposit of £1,000. This ISA allows further additions while the issue remains open and it also permits withdrawals. Transfers in are allowed and there is no penalty for transfers out. The ISA can only be opened and managed online. Once the account matures, on 28.02.2021, it becomes an Instant Access Cash ISA maturity account.

At the same time, Leeds Building Society increased the rates on its one, two, three and five-year fixed rate ISAs. 1 Year Fixed Rate ISA (Issue 130) pays 1.26% on maturity

Looking for an Easy Access Cash ISA? See Latest Top Rates in left hand column

Variable rate bonds

Variable rate bonds offer a great alternative for those who are wary about locking their funds into a fixed rate bond and potentially missing out on the prospect of future rate rises.

Family Building Society currently offers a highly competitive variable rate bond. From a minimum opening deposit of £5,000, 5 Year Tracker Bond (6) pays a variable rate of 1.77% yearly, with the guarantee that the gross rate will be 1.02% above the Bank of England base rate for 60 months.

until 28.02.2021, 2 Year Fixed Rate ISA (Issue 124) pays 1.40% yearly until 28.02.2022, 3 Year Fixed Rate ISA (Issue 85) pays 1.55% yearly until 28.02.2023 and 5 Year Fixed Rate ISA (Issue 98) pays 1.70% yearly until 02.03.2025. All ISAs require a minimum deposit of £100 to open. They allow further additions until 29.2.2020. Earlier access is permitted but subject to 60 days’ loss of interest on the one-year version, 150 days’ loss on the two-year option, and the three and five-year versions are subject to penalties of 240 days and 365 days respectively. Transfers in are allowed, while transfers out are permitted but subject to the same interest penalty loss as earlier access. These ISAs can be opened and managed in branch, by post and online.

Easy access opening restrictions removed

Cynergy Bank has removed the opening restrictions on its competitive easy access account this week. Online Easy Access Account – Issue 26 pays 1.36% on its anniversary on an opening minimum deposit of £1. This rate includes a bonus of 0.61% for 12 months. It allows unlimited further additions and withdrawals are also permitted via a nominated account. It can only be opened and managed online.

At the same time, Cynergy Bank launched new one, two and three-year fixed rate ISAs this week. The one-year version of its Fixed Rate Cash ISA pays 1.40%, the two-year version pays 1.45%, and the three-year version pays 1.50% – all on their anniversaries. A £500 minimum deposit is required to open these ISAs. Savers can add further additions to these ISAs with a variable rate paid (refer to the provider for details). Earlier access is permitted subject to 180 days’ loss of interest. Transfers in are allowed, while transfers out are permitted but subject to the same interest penalty as earlier access. These ISAs can only be opened online, but can then be managed by post, by phone and online.

This week also saw Cynergy Bank launch its one, two and three-year loyalty fixed rate ISAs. The one-year version of Loyalty Fixed Rate Cash ISA pays 1.45%, the two-year option pays 1.50% and the three-year version pays 1.55% – all on their anniversaries. These ISAs require a minimum opening deposit of £500 and they are only available to existing customers of six months or more. Savers can add further additions with a variable rate paid (refer to the provider for details), while earlier access is permitted but subject to 180 days’ loss of interest. These ISAs can only be opened online but can then be managed by post, by phone and online.

Range of bonds increase

Atom Bank increased the rates on its one, two, three and five-year fixed rate bonds this week. 1 Year Fixed Saver pays 1.65%, 2 Year Fixed Saver pays 1.75%, 3 Year Fixed Saver pays 1.75% and 5 Year Fixed Saver pays 1.75% – all on their anniversaries. All these bonds require an opening minimum deposit of £50. They allow further additions for one week from account opening, while withdrawals are not permitted. These ISA can only be opened and managed via mobile app. For those looking to supplement their income, there are versions of these bonds that pay interest monthly at lower gross rates.

Fixed bonds rates rise

Skipton Building Society has increased the rates on its one, two, three and five-year fixed rate bonds this week. 1 Year Fixed Rate Bond Issue 108 pays 1.15% at £500 and 1.25% at £20,000, 2 Year Fixed Rate Bond Issue 108 pays 1.25% at £500 and 1.35% at £20,000, 3 Year Fixed Rate Bond Issue 108 pays 1.35% at £500 and 1.40% at £20,000, and 5 Year Fixed Rate Bond Issue 108 pays 1.40% at £500 and 1.45% at £20,000. All these bonds pay interest on their anniversaries, with monthly interest options available at a slightly lower gross rate. Further additions are allowed for seven days from the account opening, while withdrawals are not permitted. These bonds can be both opened and managed in branch, by post and by phone. There are also e-bonds versions of all these accounts that can only be opened and managed online.

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Ask Rachel

Working in the financial industry for over 30 years, Rachel Thrussell is the leading independent expert on UK savings products. Her views are constantly in demand from both the industry and the press.

I opened a fixed rate ISA in November last year with £10,000 and now have another £5,000 I’d like to add to it. However, the provider is refusing to take the top-up, as it says there was a two-week period after I opened the account during that I could have made additional deposits, but that this has now passed. Is there any way I can get this £5,000 invested for the current tax year?

The main problem is that you are only allowed to subscribe to one cash ISA each tax year and the rules of the one that you have opened mean you can’t put any more funds into it. One potential solution would be to transfer to a new provider that does accept top-ups, although I presume there would be an exit penalty to pay. If you don’t want to transfer, but still want to use your annual ISA allowance (£20,000 for the 2019/20 tax year), you are allowed to open a stocks & shares ISA in addition to one cash ISA and therefore could put your £5,000 into this type of account. However, this is obviously far riskier than a cash ISA, and there is the chance you will get back less than you put in.

Get your savings questions answered by Rachel by emailing rachel@saversfriend.co.uk We regret we cannot answer emails personally

This week's
average rates

How do your savings compare?

No Notice	0.59%
Notice	1.09%
Cash ISA	1.13%
1 Year Fixed Rate Bond	1.22%
2 Year Fixed Rate Bond	1.34%
3 Year Fixed Rate Bond	1.46%
4 Year Fixed Rate Bond	1.71%
5 Year Fixed Rate Bond	1.72%
14 January 2020

Alternative sources of income

Equity release borrowers expected to be younger in 2020

New research published by Canada Life has shown that not only did the equity release market have a strong 2019, but financial advisers are expecting their clients to be younger, as well as predicting that many are looking to take out a bigger loan this year.

According to research by Canada Life, almost two in five (38%) financial advisers expect their clients to be younger in age during 2020, while more than one in five (21%) expect the size of loans to increase. Canada Life also found that £2.84bn was lent through equity release by the end of the third quarter of 2019 and many within the sector predicting lending will exceed £5bn by the end of 2020.

Alice Watson, Head of Insurance Marketing at Canada Life, said: “Equity release products have grown in popularity, almost since their inception. As the market grows and matures, home finance options are becoming a key source of retirement income for many retirees, particularly for supporting their families.

“An important way in which people can support their families is by helping the younger generations to get on the property ladder. With house prices continuing to rise, it’s likely that more retirees will want to help their children and grandchildren in this way. Equity release allows them to use the value in their property to do this, while staying in their own home. The fact that clients are expected to be younger next year is likely linked to over-55s looking to help family by giving an early inheritance.”

As well as using the money to gift to children, the demand for bigger loans could also be linked to a need among clients in or approaching retirement to use equity release to help with the cost of care. Among advisers, 8% predict that needing to fund the cost of care will be a main driver of equity release demand in 2020.

Watson added: “We know that nearly 14 million people plan to remain in their current home in retirement. Over the last year, clients have been using equity release to either fund home improvements so that they can continue living in their house, or for at-home care. As people choose to age in place, it’s important that they can adapt their home to meet their changing needs.

“While we await the Government’s social care green paper, it’s likely that more people will consider how they can use equity release to ensure they are able to enjoy a comfortable retirement, in their own home.”

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Equity release borrowers expected to be younger in 2020

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