Best buy savings: Gatehouse Bank offers 1.51% fix for a year

A new best buy savings account has launched this week offering the highest short-term fixed return for nearly a year-and-a-half.

Gatehouse Bank has launched its Green Saver account paying 1.51 per cent. It marks the first time rates have nudged past 1.5 per cent for locking cash away for 12 months since May 2020.

The challenger bank adds that for every account opened, a tree will be planted in UK woodlands, a move which looks to capitalise on how some Britons are moving towards making their finances greener.

The account can be opened with £1,000 but only online. Crucially, Gatehouse is part of the Financial Services Compensation Scheme which protects savers to the tune of £85,000.

The London-based bank is Sharia compliant which means it cannot offer customers guaranteed interest. Instead it offers an expected profit rate from accounts.

These types of accounts have become more mainstream and often appear in This is Money’s independently compiled best buy tables.

Another example savers might be familiar with is Al Rayan Bank – the bank which has been knocked off our top spot in the tables.

Ultimately, an exact return on these accounts is not necessarily guaranteed. 

‘Firm believers in Sharia finance accept banks might not provide a 2 per cent return, they could get 1.8 per cent or 2.2 per cent’, Charles Haresnape, the chief executive of Gatehouse Bank previously told us.

But this does not usually happen. 

‘We do our absolute utmost to deliver a quoted return’, Haresnape added, ‘and we’ve never not paid the quoted rate, we manage it very closely on a daily basis so we can give that commitment.’

You can read more about Sharia complaint banks here: Sharia banks dominate the fixed-rate savings best buy tables: How do they work?

Gatehouse is also offering a best rate of 1.6 per cent fixed for 18 months and 1.75 per cent over two years, 0.01 percentage point lower than top of the table Al Rayan.

The highest rate it is offering is 1.86 per cent over five years. 

This can only be beaten by new challenger Recognise Bank which launched last week with a bumper 2 per cent rate as deals continue to improve.

Elsewhere, Allica Bank has bumped up its one-year fix to 1.4 per cent to take third place in our best buy tables and its two-year fix to 1.75 per cent to take joint second place with Gatehouse, as challengers continue to help boost the market.

No rates currently on offer from a mainstream savings provider with FSCS protection can currently come close to inflation, which was recorded as 3.2 per cent for August.

Moneyfacts research last week showed that one-year rates and longer-term fixed rates have nudged higher in recent weeks.

However, the average shelf life for a fixed-rate bond has fallen to 33 days on average, compared to 53 days a month ago, suggesting deals are not sticking around for as long.

Rachel Springall from Moneyfacts, adds: ‘Savings providers will need to act quickly to react to the notable flux of rate rises in the market and indeed any demand from savers looking to fix their cash for a competitive return. ‘

How to find the best savings rates

Savings rates have been in the doldrums for a while and exacerbated by the pandemic.

But there are ways to ensure your cash is in the best of the bunch at all times. 

Over the past few years a number of savings platforms have launched, offering savers the option to switch as and when better deals become available. 

They each work slightly differently and include their own exclusives. To check out what’s on offer take a look yourself:

> Hargreaves Lansdown Active Savings

> Raisin 

> Flagstone  

Or you can view This is Money’s comprehensive best buy savings tables here, independently curated by savings guru Sylvia Morris:

> Compare best savings rates now