Masthaven Bank has announced plans to close its savings accounts and stop offering mortgage loans for new and existing customers over the next two years.
By the end of 2023, the provider aims to close all savings accounts, and have sold its mortgage book – with around 3,500 loans – to an alternative provider.
Around 19,000 savers currently have deposits with the bank, and will need to find a new home for their cash before it closes.
Here, Which? explains what the move means for those with savings or mortgages held with Masthaven Bank, and what action you need to take.
Why is Masthaven Bank closing?
Despite only being awarded a banking licence in 2016, Masthaven Bank has decided to leave the UK banking market as the result of a ‘comprehensive strategic review’.
The provider said it hadn’t secured the level of investment needed to grow the bank while serving its savings and mortgage customers, so it’s closing these services in order to grow another way.
The bank says it has enough money to repay savings customers by the end of 2023, on or before their accounts’ contractual maturity dates.
What does this mean for Masthaven Bank savers?
The most important thing to know is that your savings are safe, and are still covered by the Financial Services Compensation Scheme (FSCS) which covers up to £85,000 per person.
Masthaven Bank is not going bust, so you shouldn’t need to make an FSCS claim.
If you have an instant-access account
Savers with a Masthaven Bank eSaver account can withdraw their funds whenever they like; this has always been the case with this account. This account is where funds are sent when a fixed-term account has matured, but you haven’t told the bank to reinvest them elsewhere.
The only options for money in this account is to either reinvest it in a Masthaven Bank fixed-term account, or return it to your bank account. Six-month fixed-term accounts are still available to new and existing customers, but these will be withdrawn nearer the closing date.
If you have a fixed-term savings account
Masthaven Bank won’t be changing the terms of its fixed-term accounts, which state that you cannot withdraw funds before the end of your term. So, if you signed up to a one-year fixed-term account in October 2021, for instance, you won’t be able to access that money until the bond matures in October 2022.
If your fixed-term account is due to mature during or after 2023, you’ll either have your deposit returned on the account’s maturity date, or possibly before. Masthaven Bank says it will contact all affected customers in the coming months to explain what will happen next – but in the meantime you won’t be able to access your funds, and they’ll continue to earn the same rate of interest.
- Find out more: how to find the best savings account
If you have a mortgage with Masthaven Bank
Masthaven says those with mortgages or bridging loans don’t need to take any action right now, as the terms of their loans and mortgages will remain the same.
But it’s a good idea to keep up-to-date about whether or not the bank sells the loan book, as you may want to reassess what this means for your mortgage if a sale goes through.
If a sale doesn’t happen, you’ll need to wait until the end of your fixed period and then you can remortgage to another lender.
While it’s not common, some mortgage customers could face difficult decisions as a result of this change.
For instance, anyone coming to the end of their fixed-rate period – but with a short period left on their overall mortgage term – might have been planning to transfer to another deal from Masthaven Bank to avoid the fees involved in switching mortgage.
Masthaven Bank says it will continue to process all rate switching requests as normal, but if your term ends after the mortgage book has been sold then a product transfer like this might not be possible. In this case, you’d have to choose between paying the standard variable rate (SVR) or waiting until the mortgage book has been sold.
If you have any concerns, contact Masthaven Bank; it has assured borrowers it will continue its support throughout the process.
- Find out more: finding the best mortgage deals
What to look for in a new savings account
Once Masthaven Bank’s savings accounts have closed, thousands of savers will be on the lookout for a new home for their savings. While the interest rate on offer is, of course, an important factor, it’s not the only thing you should look for. Here are some other features you should consider:
- Can I manage the account the way I want to? While there are lots of online-only savings providers, these won’t be suitable for anyone who prefers to visit a branch or manage their account over the phone, so make sure the features on offer suit your savings style.
- What is the provider’s customer service record like? It’s good to know how existing customers rate the savings provider, in case you run into any issues. We’ve rated the best and worst savings providers to see how real customers rate dozens of banks and building societies.
- Does it have any tricky terms? Sometimes top-rate savings accounts are a little more complicated to use; we’ve seen several with rules around how many withdrawals can be made each year, some that include bonus interest for the first 12 months, and some that require high minimum initial deposits. Make sure you’re aware of the account terms, and that you’ll be able to stick to them – or you could miss out on interest.
- How sustainable is the account? We carried out research on a number of UK savings providers to see how environmentally-friendly their practices were; if sustainability is an important part of your decision when choosing a new provider, see which providers came out on top.
source https://www.which.co.uk/news/2022/02/masthaven-bank-to-withdraw-from-the-savings-and-mortgage-market-can-you-switch/