- Manyata Bank sets 2% rate for five years
- The top 1% paying 95 days notice has launched an account
- Fixed rates have risen higher in recent months driven by challenging banks
A new challenger bank has introduced a best buy savings rate of 2 per cent as fixed bond deals continue to grow.
Recogniz Bank was given the green light earlier this week to rake in deposits and is part of the City of London Investment Group.
The account is fixed for five years and offered a 2 per cent deal in 2020 for the first time since the early weeks of the pandemic, when Gatehouse Bank offered a rate similar to the ‘expected profit’.
Best buy: Accredited bank launches top five-year fix at 2% and 95 days notice account paying 1%
Accounts can be opened with £1,000, but online only, up to £85,000 in cash secured by the Financial Services Compensation Scheme and deposits will be used to lend to small and medium-sized businesses.
The rate is better than any other deal that requires savers to settle their money by 2026.
Atom Bank is second on our independent best buy table with 1.84 percent, followed by Secure Trust at 1.8 percent.
It is unusual for a new challenger to launch in the typical long-term fixed rate market, and the gap between one- and five-year fixes has narrowed somewhat in recent months.
For example, savers can grab 1.45 percent fixed for one year or 1.76 percent over two years with Al-Rayyan Bank.
Rachel Springall, finance expert at information website Moneyfacts, says: ‘It wouldn’t be too surprising to have savers who are hesitant to lock in their money for longer periods, but there are plenty of fixed bond options for shorter durations. Consider the accounts and also take notices.
Later, Recogniz also launched a 95 day notice account that pays 1 percent, which is currently one of the best rates for this type of account.
In comparison, only OakNorth offers slightly better 95 days at 1.01 percent, while the best buy for all-easy access is currently at 0.6 percent.
This type of notice account offers savers a better rate than easy access, but has more flexibility than locking up money that cannot be accessed for a long period of time.
Rachel adds: ‘Savers who are uncomfortable locking their money for a year or more may find notice accounts as a choice between fixed and easy-access accounts, especially as notice rates rise. have been.
“Monthly, the average notice rate rose for the fifth month to 0.47 per cent and is at an all-year high. There are as many challenger banks in this area as there are in the fixed bond market.
With the FSCS protection on the part of a mainstream savings provider, none of the rates currently can come close to inflation, which was recorded at 3.2 per cent for August.
Jason Oakley, Chief Executive of Recogniz Bank, said: ‘By saving with Recogniz Bank, customers will not only have a safe home for their money, they will also find that their FSCS-protected savings are helping aspiring SMEs. So they are directly supporting the UK economy as well.’
The bank says that business savings products will launch in the future and is aimed at 50,000 customers.
Backed by cloud computer technology, the bank says it aims to make lending decisions faster and access funds faster through a network of regional centers in London, Manchester, Birmingham and Leeds.
Recognize currently offers a range of unregulated lending options including commercial mortgages and bridging loans, with professional buy-to-let mortgages soon to follow.
The bank claims to have already received £750 million in loan inquiries since opening in November 2020 and aims to provide more than £1.3 billion in business credit over the next five years.
Fixed-rates increase more but shelf life is shorter
According to Moneyfacts, the average one-year fixed rate bond has risen from 0.6 per cent in August to 0.67 per cent today.
Meanwhile, the average long-term fixed rate bond has increased from 0.87 per cent to 0.94 per cent.
This is also higher than September 2020, but a far cry from 1.34 per cent for the one year and 1.64 per cent for the longer term recorded in September 2019.
In addition, the average shelf life for a fixed-rate bond has dropped to an average of 33 days, compared to 53 days a month ago, suggesting that deals are not lasting that long.
Rachel adds: ‘Savings providers will need to act quickly to react to significant increases in rates in the market and any demand from savers looking to recover their cash for truly competitive returns. ‘