Consider long-term bond to beat future inflation rises
Consumers should be aware that although inflation has dropped to 1.5% this week, savers wanting long-term inflation-beating rates should consider locking into a long-term deal now or may find their money eroding over the next few years.
The Bank of England’s official forecast predicts that inflation will hit 2.2% in the last few months of 2022, but due to fixed bonds rates falling over the last 12 months, there is now currently only one three-year bond that can beat this rate.
Research carried out by Moneyfacts.co.uk shows that with today’s statistics revealing that CPI fell to 1.5% during October, there are now 199 fixed rate bonds, 50 fixed rate ISAs and 18 notice accounts (based on £10,000 deposit) that can now match or beat inflation. Within that, 168 fixed bonds, 40 fixed ISAs, and 16 notice accounts pay more than 1.5%.
Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Speed remains the key to securing a top interest return and not just on fixed rates. As providers can act quickly to cope with both their market exposure and demand, lucrative rates may not sit on the shelf for long and savers easily could miss out.”
Product Spotlight: Five-year fixed rate bonds
Got a lump sum and looking for a good, long-term return? A five-year fixed rate bond could be just the thing:
• UBL UK’s 5 Year Fixed Term Deposit is offering a chart-topping interest rate of 2.36% AER paid monthly, on maturity or on the anniversary of opening. A minimum deposit of £2,000 is required and customers should note that early access is at the bank’s discretion and carries a penalty of 365 days’ loss of interest. This account can be opened and managed in branch or by post.
• Gatehouse Bank’s Fixed Term Deposit offers an expected profit rate of 2.30% AER on the anniversary of opening. A minimum deposit of £1,000 is required and customers should note that no withdrawals are permitted with this online-only bond. This bank operates under Islamic finance principles.
• Gatehouse also takes the number three spot with the Raisin UK – 5 Year Fixed term Deposit paying an expected profit of 2.30% AER on maturity from a minimum deposit of £1,000. As is usual with fixed rate bonds, no withdrawals are permitted. This bond must be opened online but afterwards can be managed by post and by phone too. Again, this bank operates under Islamic finance principles.
Top products – At a glance
Mortgage redemption fees creep up in 2019
Analysis from Moneyfacts.co.uk shows the average mortgage redemption fee has increased by 9.3% over the past year, from £107 to £117. The maximum fee currently being charged to end a mortgage loan is £400, an increase of £175 on the highest fee of £225 last year.
Borrowers concerned about paying a fee at the end of their mortgage could consider selecting a lender who doesn’t charge a redemption fee or look for a variable rate mortgage, as around a third of these don’t usually charge to redeem a mortgage.
Halifax, HSBC, Lloyds Bank, NatWest and Royal Bank of Scotland are the only lenders who have consistently not charged a redemption fee in 2009, 2014, 2018 and this year. In 2019, there were also five other lenders that did not charge redemption fees: Bank of Ireland for Intermediaries, Atom Bank, M&S Bank, Reliance Bank and TSB.
Borrowers should check the information sent to them from their lender about mortgage fees. Whenever a lender changes its fees, it should send a communication to its affected customers. Those with a mortgage that is due to end soon should look particularly closely to avoid an unexpected fee.
Product Spotlight: Two-year fixed rate for remortgages
If your current mortgage deal is coming to an end, now may be a good time to consider securing your payments into a two-year fixed rate mortgage.
• NatWest Int Sols tops our chart, offering a rate of 1.19% (3.8% APRC) fixed until 31 January 2022, at which point it reverts to 4.24% variable. This deal is for remortgage customers looking for a maximum 60% loan-to-value (LTV) and requires a minimum loan of £25,000, to a maximum that is determined by LTV. This mortgage charges £995 in product fees and includes the incentives of free valuation and no legal fees.
• Barclays Mortgage is second in our chart with a rate of 1.21% (3.8% APRC) fixed until 31 January 2022, which then reverts to 4.24% variable, and is available at a maximum 60% LTV for all borrower types. This deal requires a minimum loan of £5,000, up to a maximum of £2 million. It charges £999 in product fees and includes the incentives of free valuation, and remortgagers also have the choice of either no legal fees or £250 cashback.
• Third place in our chart this week is Santander, with a remortgage deal that offers a rate of 1.21% (3.6% APRC) fixed until 2 February 2022, and then reverts to 4.00% variable for term. This mortgage is for those seeking a maximum 60% LTV and requires a minimum loan of £6,000, up to a maximum of £1 million. It charges £999 in product fees but includes the incentives of free valuation fees up to a maximum of £1,190 for England, Wales and Northern Ireland, with £95 toward valuation fees in Scotland. There is also the offer of £250 cashback on completion or free legal fees.
Fraudsters using Shawbrook Bank to scam consumers
Consumers are being warned to be aware the Shawbrook Bank has been cloned by fraudsters and to be careful when depositing money with the bank.
According to the Financial Conduct Authority (FCA), the fake bank does not have a website, but fraudsters have been contacting people out of the blue claiming to be Shawbrook Bank and offering highly competitive rates.
Fraudsters have been using the name Shawbrook Bank Ltd, which is a clone of the authorised bank, along with the telephone number 0127 742 4925 and the email address shawbrook@ promotionalenquiries.co.uk. Consumers who think they have been approached by this unauthorised bank, or any other cloned firm, should contact the FCA on 0800 111 6768 or email email@example.com.
Consumers can continue banking with the authorised Shawbrook Bank; however it is important to ensure that any money deposited is done with the authorised bank and not the clone. The authorised Shawbrook Bank details are:
Firm Name: Shawbrook Bank Limited
Firm Reference Number: 204574
Address: Lutea House, Warley Hill Business Park, The Drive, Great Warley, Brentwood, EssexCM13 3BE
Telephone: +44 1277751110
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