P2P under pressure as fixed rate bonds pass 6pc
Fixed rate bonds are now paying more than six per cent in interest to savers, heaping pressure on peer-to-peer platforms which are offering similar rates but without Financial Services Compensation Scheme (FSCS) protection.
According to the latest analysis from Money.co.uk, NS&I is currently offering the top saving product on the market, with one-year fixed term bonds paying 6.2 per cent in interest.
Two other bonds are also offering returns in excess of six per cent. My Community Bank is advertising an 18 month fixed term deposit at 6.06 per cent, while Ford Money has listed a two-year fixed term bond at 6.05 per cent.
Meanwhile cash ISA and easy-access savings accounts are offering returns of five per cent or more.
Read more: IFISA returns on the rise
Shawbrook Bank is offering a one-year fixed rate cash ISA bond paying 5.83 per cent, while Close Brothers has a two-year fixed rate cash ISA paying 5.81 per cent.
Former P2P lender Zopa has one of the most generous cash ISA rates, with 5.56 per cent paid on money saved within the Zopa Smart three-year fixed term ISA.
Meanwhile, Santander is marketing an easy access saver limited edition offer which pays 5.2 per cent; while Cynergy Bank’s online easy access account is paying five per cent. Both of these accounts can be wrapped within a cash ISA.
Read more: Inflation gap can be closed with IFISAs
“We are still seeing fixed-rate bonds offering interest rates of more than six per cent, but now cash ISAs are trying to keep up with the competition,” said Lucinda O’Brien, savings expert at Money.co.uk.
“For example, Shawbrook Bank’s one-year fixed-rate cash ISA is now at a very attractive 5.83 per cent, which is great for savers who are looking for a way to earn tax-free interest. If you would prefer a longer fixed-term, then Close Brothers Savings has a two-year fixed-rate cash ISA at 5.81 per cent.”
According to research from Peer2Peer Finance News, at the end of February 2023, a fully diversified Innovative Finance ISA portfolio spread across all 41 available providers would return an average of 8.83 per cent, according to the target returns stated for the 2022/23 tax year.
Read more: ISA season: Where to find the highest IFISA returns