Following the government’s decision in last month’s Budget to raise Isa limits, the challenger bank is seeking to add its own competitive deals – which it claims will top many of the independent best-buy tables – to the market.
Among its list of products, the bank has offered new rates on its three-year and five-year fixed-rate bonds, with the former paying an annual equivalent rate of 2.65 per cent and the latter 3.1 per cent.
Shawbrook Bank confirmed that prospective savers can invest anything from £5,000 to £2m in the fixed-rate bonds, with provision for larger amounts available on request.
The bank has also launched two shorter-term saving vehicles, consisting of the 120-day notice account at 1.85 per cent AER and the 95-day notice account, which pays 1.75 per cent AER.
According to Shawbrook Bank, savers can place any amount from £1,000 to £500,000 into the 120-day and 95-day notice accounts.
Interest on all the bank’s savings accounts can be paid either gross or net, depending on an individual’s tax status, and is paid on 31 December every year.
The challenger bank also offers fixed-rate bond accounts over six months, one year and four years, with respective AERs of 1.25 per cent, 1.65 per cent and 2.85 per cent.
Reactions
Provider view
James Blower, director of savings at Shawbrook Bank, said: “These new rates reflect Shawbrook’s commitment to being consistently competitive in our offering to savers. The recent Budget statement from the chancellor contained some unexpected but much-needed good news for savers, and we hope that these highly competitive products provide further cheer for savers. Forty per cent of the bank’s deposits for July, August and September 2013 were generated from our five-year bonds – proof in itself that there are savers out there hungry to lock their money into longer-term investments. Shawbrook continues to lead the way with its commitment to being consistently competitive on interest rates.”
Adviser view
Dennis Hall (pictured below), managing director of London-based Yellowtail Financial Planning, said: “These are pretty good rates, and clearly show that Shawbrook needs to raise money. Some of our clients want to put their money with safer institutions like mainstream banks, and because Shawbrook is not a high street name it needs to offer better rates. Interest rates are low right now, but if the recovery keeps gaining momentum, rates will soon go up.”
Charges
There are no fees associated with these products.
Verdict
The rates across these products are very competitive, with only the three-year fixed-rate bond not coming out on top in its sector. My Community Bank offers a three-year fixed-term deposit at 2.75 per cent, although Shawbrook Bank offers the best rates on five-year fixed-rate deposits and notice accounts at the time of launch. These deals are likely to appeal a lot to savers who don’t want the risk associated with stockmarkets. However, with interest rates notably low, those wanting a five-year or three-year fix may be better off waiting for rates to rise before getting locked in.
