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5 Aug 2020

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Moneyfacts.co.uk – weekly product update 19/09/2007

7% savings gone in a flash
A surprise increase in rates for ING customers
Bradford & Bingley raises the bar with a 6.4% no strings account
Abbey now offers 125% mortgages
Halifax tops the charts with a 15 month 0% purchase deal
First Direct scraps credit interest

 

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Rachel Thrussell, Head of Savings at Moneyfacts.co.uk – the money search engine, comments:

7% savings gone in a flash

“The fixed rate savings frenzy fizzled out almost as quickly as it started, with three out of the five best buy rates being withdrawn this week, and rates falling below 7% once again.

  • Stroud & Swindon BS – Fixed Rate Bond Issue 57 paying 7.05% withdrawn 17.9.07                     
  • Standard Life Bank – 6 Month Fixed Rate Bond paying 7% withdrawn, and replaced paying 6.75%
  • West Bromwich BS – eBond 11 paying 6.86% withdrawn 17.9.07

 

Company

Account

Gross

AER

Notice or Term

Deposit

SAGA
wef: Sep 20 2007

Fixed Rate Savings Bond

6.92%

6.92%

1 Year Bond

£1

Birmingham Midshires

Internet Fixed Rate Bond

6.91%

6.93%

11 Month Bond

£1

Halifax

Web Saver

6.75%

6.75%

2 Year Bond

£500

Halifax

Web Saver

6.70%

6.70%

3 Year Bond

£500

Halifax

Web Saver

6.62%

6.62%

4 Year Bond

£500

Halifax

Web Saver

6.52%

6.52%

5 Year Bond

£500

Moneyfacts.co.uk Best Buys 19.9.07

“Rates at these levels were never sustainable in the longer term; rather they were used to entice savers deposits quickly. But it was surprising to see their availability lasting less than a week.

“Perhaps savings providers are deterred from offering such high rates in the current climate for fear of misinterpretation that ‘needing’ to find additional savings deposits will spark fears of a liquidity problem.

“With rates still very competitive in the fixed rate market, savers looking to bag themselves one of these deals need to act sooner rather than later as they may not be here to stay.”

A surprise increase in rates for ING customers

“ING increased rates for its savers (Savings Account) to 5.13% gross, an increase of 0.24%. This is good news for ING savers who have recently seen their rate fall behind the market following the failure to respond to 2 base rate rises over the last year.

“However even with this additional rate rise, the rate still falls short of the top paying no notice accounts, with 6.5% available to savers prepared to accept an introductory bonus or 6.4% on a no strings internet account. 

“With the additional incentive of £50 on account opening being marketed to prospective customers, it appears ING is feeling the pinch of its falling savings book, and again are ramping up its proposition in the savings market. But to have any significant impact, much more needs to be offered.”

                              
Bradford & Bingley raises the bar with a 6.4% no strings account

“For some time, Sainsbury’s and Icesave have led the way offering 6.25% and 6.2% respectively no strings internet accounts. But today sees the bar raised by Bradford & Bingley with its no string Internet Saver account offering an impressive 6.4%. The account can be opened with £1, with a straightforward rate without bonus or restrictive terms and conditions. 
 
“At 0.65% above bank base rate and 2.3% higher than the current rate of inflation (RPI), it’s a very attractive offer. With such of wide choice of competitive rates to choose from, savers would be foolish not to take advantage of them.

“Too many of us let our providers get away with paying a poor rate of return. Vote with your feet and reap a healthy reward in the process.”
 

Julia Harris, Mortgage Expert at Moneyfacts.co.uk – the money search engine, comments:

Abbey now offers 125% mortgages

“In a time when the credit crunch barely leaves the front pages of our newspapers or TV screens, it would seem a natural reaction for lenders to increase rates or tighten their lending criteria. This makes it a surprising time for Abbey to announce a range of products designed for borrowers looking to finance up to 125% of their property value.

“Abbey joins only Alliance & Leicester, Birmingham Midshires Solutions, Coventry BS (Godiva Mortgages) and Northern Rock to offer 125% loan to value products, but is unique in the fact that the full 125% is secured borrowing. The maximum secured loan was previously 115% from Accord Mortgages (for professionals only) or from Yorkshire BS.

“Abbey offers a range of fixed rate deals at 125% LTV, with a variety of fee and rate combinations to choose from.                        

“The extra money these loans can provide borrowers can be a lifeline in helping borrowers get on the property ladder, providing vital cash for stamp duty, legal fees and even essential home improvements. But borrowers should remember they are starting their mortgage effectively in negative equity, requiring over 25% growth in the property market before they can see any equity in their property. While prices continue to rise, especially at the pace we have seen over the last few years these can soon be recouped, but it is unlikely that such a growth rate is sustainable.

“These loans can be a perfect solution for some borrowers, but should be taken with a wealth warning. Their success relies on an increasing property market. Borrowers should not forget they are spreading the cost of their additional borrowing over a long period of time and therefore accumulating a hefty interest bill.”

 

Samantha Owens, Head of Personal Finance at Moneyfacts.co.uk – the money search engine, comments:

Halifax tops the charts with a 15 month 0% purchase deal

“Halifax takes purchase introductory deals to the same level as balance transfers, offering an impressive 15 months 0% interest, with the closest deals only coming in at 12 months from Halifax, HSBC & Sainsbury’s.

“0% on purchases can make financial sense for savvy credit card users, and at 15 months the Halifax purchase card cannot be beaten. However borrowers should still spend cautiously. While interest free borrowing is attractive any balance accumulated over this introductory period will need to be repaid, and at an average reverts to rate of 14.9%, this could become costly unless borrowers nab themselves a further 0% balance transfer deal.

“For anyone looking for 0% purchases and balance transfer rates, the optimum choice would be the Halifax card for spending and the Virgin Money MasterCard for the balance transfer. However for those looking for a simpler life, the Halifax One 12 Month Offer MasterCard card offers 12 months on both purchases and balance transfers.

First Direct scraps credit interest

“First Direct has become the first current account provider to scrap credit interest on its current accounts, promising to invest this money in enhanced features and savings rates.

“While First Direct is in the minority in not paying credit interest on current accounts, it is not alone, and many others pay a measly 0.10%. With the rates on its existing accounts ranging between 0.1% and 2%, many account holders will not face significant losses.

“With a core of providers offering credit interest on current accounts to beat those found in the savings market, its unlikely that in the short term that we will see the demise of credit interest on current accounts.”

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry. 

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