Money Insider: Savings best buys – blink and you'll miss them

Fixed rate deals have easily been the most competitive element of the savings market throughout the last 12 months, and the rush by savers to get their hands on a best-buy rate shows no signs of easing.

The latest Moneynet research reveals that current high levels of demand has resulted in more than a dozen best-buy bonds being withdrawn during the last 10 days.

One of the main reasons these bonds have had such a short shelf life is down to people coming to the end of a very attractive deal from one or two years ago, and trying to lock in to the best rate around at the moment.

Savers who fixed their interest rate 12 months ago could be coming off a rate as high as 5.75 per cent ( perhaps taken out with ICICI Bank UK or Anglo Irish Bank) and many of those who locked in for two years in December 2007 will be waving goodbye to a rate of six per cent and above, with the likes of Halifax paying as high as 6.45 per cent back then. Savings of £20,000 will have earned £1,150 in interest (gross) on 5.75 per cent from a year ago, whereas the best one-year bond available at the moment – with State Bank of India at 3.75 per cent – will net just £750.

The market is, however, more competitive over two years where there is no shortage of overseas and more niche players looking for a slice of the action. Rates on two-year bonds are currently paying almost 0.75 per cent more than one-year options, so it's worth considering splitting your savings pot and locking some of it away for one year and some of it for two.

Elsewhere, the Chancellor's stamp duty hammer blow in his pre-Budget report overshadowed some positive news in the mortgage market.

Yorkshire Building Society last week launched two first-time buyer mortgages as the outlook for new borrowers started to look a little brighter.

Although borrowers still need to find a 15 per cent deposit, it is good to see more keenly priced options, with a three-year fixed rate at 5.84 per cent and a five-year fixed rate product at 5.99 per cent on offer. These mortgages also come with a free valuation, free legal work, £500 cashback and, importantly, no upfront fees.

For those in the market for an 80 per cent loan-to-value mortgage, Newcastle Building Society has stormed the best-buy tables with some excellent new fixed and tracker mortgage products

This stand-out deal is a two-year fix at just 3.65 per cent with a £999 fee. This is a bold move by the Newcastle and, with the products available for both purchase and remortgage, there's likely to be no shortage of demand.

However, just as we appeared to be moving up a gear and a little confidence was returning to the mortgage and housing markets, Alistair Darling put a damper on things.

The pre-Budget report signalled the end of stamp duty exemption for properties up to £175,000, a move that risks wiping out any early signs of recovery.

The Chancellor admitted the recovery is fragile but still pushed ahead with this short-sighted decision to reintroduce the one per cent tax levy on properties priced £125,000 and above. With many lenders still erring on the side of caution, first-time buyers are already faced with finding deposits of 10 per cent to 20 per cent, so having to pay at least an additional £1,250 in taxes could hamper demand at the vital first rung of the property ladder.

Andrew Hagger is a money analyst at Moneynet.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Suggested Topics
PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

    Reach Volunteering: Charity Treasurer

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

    SThree: Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

    Ampersand Consulting LLP: Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Day In a Page

    In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

    Iran is shifting from pariah to possible future policeman of the Gulf

    Robert Fisk on our crisis with Iran
    The young are the new poor: A third of young people pushed into poverty

    The young are the new poor

    Sharp increase in the number of under-25s living in poverty
    Greens on the march: ‘We could be on the edge of something very big’

    Greens on the march

    ‘We could be on the edge of something very big’
    Revealed: the case against Bill Cosby - through the stories of his accusers

    Revealed: the case against Bill Cosby

    Through the stories of his accusers
    Why are words like 'mongol' and 'mongoloid' still bandied about as insults?

    The Meaning of Mongol

    Why are the words 'mongol' and 'mongoloid' still bandied about as insults?
    Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

    Kenyans still waiting for justice over Mau Mau uprising

    Thousands join class action over Britain's role in the emergency
    Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

    The last Christians in Iraq

    After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
    Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Britain braced for Black Friday
    Bill Cosby's persona goes from America's dad to date-rape drugs

    From America's dad to date-rape drugs

    Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
    Clare Balding: 'Women's sport is kicking off at last'

    Clare Balding: 'Women's sport is kicking off at last'

    As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
    Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

    Oh come, all ye multi-faithful

    The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
    Dr Charles Heatley: The GP off to do battle in the war against Ebola

    The GP off to do battle in the war against Ebola

    Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
    Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

    Flogging vlogging

    First video bloggers conquered YouTube. Now they want us to buy their books
    Saturday Night Live vs The Daily Show: US channels wage comedy star wars

    Saturday Night Live vs The Daily Show

    US channels wage comedy star wars
    When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

    When is a wine made in Piedmont not a Piemonte wine?

    When EU rules make Italian vineyards invisible