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Santander pulled out Best Buy’s Easy Access savings account last night, two weeks ahead of schedule.
eSaver Limited Edition deals paid out 2.75% on balances up to £250,000. The deal was a table topper on the independent This is Money best buy savings table.
The banking giant, which only started trading six days ago, initially said the interest rate would be available until November 1, unless it sold out.
It was replaced today by a new issue that pays a lower interest rate of 2%.
Deal Closed: Santander Withdraws Best Buy Rate of 2.75% After Huge Demand
The deal was canceled following unprecedented demand from new and existing customers, the company said.
It added that applications received by 23:59 last night will be subject to a rate of 2.75% after opening. The application will then be processed the next day.
Savings experts downplay any suggestion that Santander’s exit will mark a turning point in the savings market.
A Savings Guru spokesperson said: Deal with it for too long.
However, Skipton’s rally to 2.55% is a good sign that it will take hold around 2.25% to 2.5% once markets become more accessible, and the 3rd November base rate decision is likely to continue. We expect this to rise further.
“With a projected 1% increase, we could see easy access rates above 3% by the end of the year.”
The Santander rate cut caps a bizarre Monday for the savings market as many top interest rates were withdrawn.
Yesterday, Arica Bank withdrew from a market-leading one-year contract that was paying 4.5%.
Meanwhile, SmartSave bank withdrew its 5-year interest rate of 5.01%, but the deal has only been available since Friday, suggesting savers are keen to lock in the term.
Many savings providers are drawing the best rates from today’s market
At lunch yesterday, the Leeds Building Society announced that it will increase the interest rates available on its fixed-rate cash Isa products.
However, just an hour later, the company contacted This is Money saying that the rate hike had already been “paused/cancelled” and that it would update the new rate once agreed.
Monday’s announcement also follows the Coventry Building Society’s decision last week to withdraw all fixed-rate savings products.
On Wednesday, Coventry issued three market-leading fixed bonds with new and existing members paying up to 4.85%.
But by 3pm on Friday they were all withdrawn.
Mutual, the UK’s second largest housing association, isn’t typically the type of savings provider to set interest rates and withdraw so quickly.
A Savings Guru spokesperson added:
“It’s been a long time since they were last near the top of the best buys, so it’s possible we underestimated how much interest they’d get.
“Also, given that it’s only been a while since the IT issues hit, I think they may have been paying attention to being very competitive over the weekend.
“We may see it come back slightly again later this week at competitive rates.”
As for other fixed rate withdrawals by smaller providers, savers are advised to view this as a case of some providers changing prices rather than the beginning of a full market correction.
A Savings Guru spokesperson added:
“The pricing move Arica and Synergy made on Friday was likely agreed before we knew Coventry Building Society was going out, which is why they were pulled down so quickly today. .
“Both are small providers. Cynergy is saving around £2bn and Allica £1bn, but they can’t handle tens of millions of pounds of applications.”
But Savings Champion co-founder Anna Bowes believes yesterday’s savings activity could be linked to a government U-turn previously announced by the prime minister.
“Following the September 23rd mini-budget, there was a significant surge in the best rates on offer, particularly short-term fixed-rate bonds, so some, perhaps, dust fell shortly after these latest U-turns. We waited until it calmed down a bit and the highest rate was withdrawn.
“If the market predicts that the Bank of England will not have to raise rates as much as previously thought, we may have peaked, at least for now. I do not understand.
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