Santander launches its best easy-to-access savings account
Santander withdrew its top easy-to-access savings account last night, two weeks ahead of schedule.
The Limited edition eSaver offer paid 2.75% on balances up to £250,000 – a deal that was a high in the This is Money independent savings tables.
Having only launched the deal six days prior, the banking giant initially said the rate would be available until November 1, unless it ran out.
It replaced it today with a new issue paying a lower rate of 2%.
Deal done: Santander withdrew its best buy rate of 2.75% after huge demand
He said the deal was withdrawn following unprecedented demand from new and existing customers.
He added that all applications received by 11:59 p.m. last night will receive the 2.75% rate when opened. Requests will then be processed over the following days.
Savings experts are playing down any suggestion that Santander’s withdrawal would be a turning point in the savings market.
A Savings Guru spokesperson said: ‘Santander’s product withdrawal tonight is no surprise – it was great while it lasted but we expect Santander to see 150m to 200m pounds of new apps a day and even the big banks can’t cope with this for too long.
“However, Skipton’s move to 2.55% is a good sign that the market will consolidate around 2.25% to 2.5% on easy access and we expect this to rise as we approach the decision on the base rate on November 3.
“With an expected 1% increase, we could see easy access rates surpass 3% by the end of the year.”
Santander’s rate cut caps yet another odd Monday in the savings market, which saw a number of the top rates pulled.
Yesterday, Allica Bank withdrew its market-leading one-year contract, which paid 4.5%.
Meanwhile, bank SmartSave withdrew its 5.01% five-year rate, with the deal only available since Friday, suggesting savers are even keen to fix for that long.
A number of savings providers withdrew the highest rates in the market today
At lunchtime yesterday, the Leeds Building Society announced that it was increasing the rates available on its fixed rate cash Isa products.
However, just over an hour later, he contacted This is Money to say that the rate increases had already been “suspended/cancelled” and that he would let us know of the new rates once they were agreed. .
Monday’s announcements also follow the Coventry Building Society’s decision last week to withdraw all of its fixed rate savings products, just two days after launching a wave of best buys.
On Wednesday, Coventry launched three market-leading fixed bonds available to new and existing members paying up to 4.85%.
However, by 3 p.m. Friday, they had all been taken down.
Mutual, which is Britain’s second largest building society, is not usually the kind of savings provider to launch and withdraw rates so quickly.
The Savings Guru spokesperson added: “It’s unusual to see such a big player pull a rate less than three days after launch.”
“We think they may have underestimated the interest they would get as it hasn’t been a top buy for a while.
“We also think they may have been aware of being so competitive over a weekend, given that their computer issues haven’t passed for a long time, and they may have been playing it safe and the have been removed to avoid problems with large volumes outside office hours.
“We may see them return with slightly less competitive rates later this week.”
As for other fixed rate drawdowns by smaller providers, savers are advised to view this more as a case of a few providers repricing than the start of a full market correction.
The Savings Guru spokesperson added: “We don’t believe today’s fixed rate changes are a turning point for the savings market, but more likely pricing errors being corrected.”
“The price changes made by Allica and Cynergy on Friday were likely agreed before they knew about the Coventry Building Society’s withdrawal and that is why they were withdrawn so quickly today.
“Both are small providers – Cynergy about £2bn in savings and Allica £1bn and they just can’t keep up with the tens of millions of pounds worth of apps they will have seen.”
However, Anna Bowes, co-founder of Savings Champion, believes it is possible yesterday’s savings activity was linked to government U-turns announced earlier by the Chancellor.
“As there has been a surge in the best rates on offer – particularly shorter term fixed rate bonds – following the September 23 mini-budget, I am not surprised that in the aftermath of these latest reversals , some of the best rates have been removed, perhaps waiting for the dust to settle a bit.
“If markets are predicting that the Bank of England will no longer need to raise rates as far as previously thought, we may have seen the peak, at least for now.” Of course, who knows what’s around the next corner.
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