Two weeks ahead of schedule, Santander withdrew its best purchase easy-access savings account last night.
The eSaver Limited Edition plan paid 2.75 percent on accounts up to £250,000 and topped the independent savings tables compiled by This is Money.
Having just released the offer six days prior, the banking giant initially stated that the rate would be accessible until November 1, barring any sellouts.
Today, it has been replaced by a new issuance with a reduced interest rate of 2%.
According to the statement, the offer was canceled due to extraordinary demand from new and existing consumers.
It noted that all applications received by last night at 23:59 will receive the 2.75 percent rate after they are processed. The applications will then be processed in the days that follow.
There is still a 2.75 percent easy-access deal with Cynergy Bank that may be started with as little as one pound, but it is expected to be discontinued soon.
The exit of Santander from the savings market is not viewed as a significant turning point, according to specialists in the field.
A spokesperson for the Savings Guru stated, ‘The withdrawal of the Santander product tonight is not a surprise – it was great while it lasted, but we anticipate that Santander was receiving between £150 million and £200 million in new applications per day, and even the largest banks can’t handle that for long.
If they missed the Santander deal, they should grab the Cynergy deal at 2.75 percent, as it will expire in the next 48 hours.
‘However, Skipton’s increase to 2.55 percent is a positive indicator that the market will consolidate between 2.25 percent and 2.5 percent on easy access, and we anticipate that this will rise in the run-up to the base rate decision on November 3’
With a predicted 1% increase, the easy access rate could surpass 3% by the end of the year.
Santander’s rate decrease concludes a bizarre Monday on the savings market, during which a number of the highest rates were withdrawn.
Yesterday, Allica Bank canceled its market-leading, one-year agreement that offered 4.5 percent interest.
Meanwhile, SmartSave bank dropped its 5.01 percent five-year rate, which had just been offered since Friday, indicating that savers are eager to fix for such a length of time.
Yesterday at midday, Leeds Building Society announced that it was boosting the rates on its fixed-rate cash Isa products.
However, a little more than an hour later, it called This is Money to inform us that the rate increases had been suspended/canceled’ and that we would be notified once the new prices had been agreed upon.
Additionally, Monday’s developments follow Coventry Building Society’s decision last week to withdraw all of its fixed-rate savings products, just two days after announcing a wave of best bargains.
Wednesday, Coventry introduced three market-leading fixed bonds with interest rates of up to 4.85% for new and existing members.
However, by Friday at 3:00 p.m., they had all been withdrawn.
Mutual, which is the second-largest Building Society in the United Kingdom, is not generally the type of savings institution to debut and withdraw rates so rapidly.
The representative for the Savings Guru stated, ‘It is rare to have such a major business withdraw a rate less than three days after its inception.
Since it’s been a while since they were at the top of the best buys list, we believe that they may have underestimated how much interest they would receive.
We also believe they may have been wary of being so competitive over the weekend, considering that it hasn’t been long since their IT troubles, and they may have played it safe and withdrawn them to avoid concerns with high quantities outside of business hours.
They may return with slightly less competitive rates later this week.
Regarding the other fixed rate withdrawals made by smaller providers, investors are encouraged to view this as more of a few providers re-pricing than the start of a full-scale market downturn.
The spokeswoman for the Savings Guru continued, ‘We do not believe that today’s fixed rate revisions represent a turning point for the savings market, but rather the correction of pricing errors.
‘The price adjustments made by Allica and Cynergy on Friday were likely agreed upon before their knowledge of Coventry Building Society’s withdrawal, which is why they were retracted so swiftly today.
“Both are modest suppliers – Cynergy has roughly $2 billion in savings and Allica has $1 billion – and they simply cannot handle the tens of millions of applications they will have received.”
Anna Bowes, the co-founder of Savings Champion, believes that yesterday’s savings activity may have been influenced by the government U-turns revealed by the Chancellor.
‘Since there was a significant increase in the best rates on offer – particularly the shorter term fixed rate bonds – following the mini-budget on September 23, I’m not surprised that some of the best rates have been withdrawn in the immediate aftermath of these latest U-turns, perhaps waiting until the dust settles.
If the markets estimate that the Bank of England will not need to raise interest rates as much as previously anticipated, then we may have reached the high, at least for the time being. However, who knows what is around the next corner?
