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Average ISA rates show biggest monthly decline since 2009
New data shows the rates on ISAs and traditional savings have been cut to their lowest level since 2009. Here’s what the savings market looks like right now
Savings accounts have been flying high for some time now, but with continuous rate falls, savers will need to act fast to bag the top rates before they disappear.
Despite 967 inflation-busting savings accounts on the market, there are now 100 fewer savings products on the market compared to a month ago. However, Rachel Springall, finance expert at Moneyfacts believes this shouldn’t stop savers from shopping around for the best rates.
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“A new ISA season should also bring a flurry of activity from providers and, due to the interest rate rises of 2023 and upcoming ISA reforms, they may be in more demand from savers who are close to breaching their Personal Savings Allowance (PSA),” says Springall.
Find out what you can earn on the average ISA account, and if now is a good time to put your savings into an ISA.
ISA rates slashed
According to Moneyfacts the average one-year fixed ISA fell for a consecutive month to 4.72%, the biggest month-on-month fall since March 2009.
Plus, the average easy-access ISA rate fell month-on-month to 3.25% and the average notice ISA rate fell to 4.18%.
But it isn’t all bad news. As it stands, the average one-year fixed ISA rate is still considerably higher compared with a year ago, when the average was 3.51% and the rate on the average easy-access ISAs was at a low of 1.66%.
That said, savers will need to act fast to bag the top ISA rates, especially with the new tax year around the corner, starting on 6 April 2024, as lenders are pulling top products and dropping rates.
Data by Moneyfacts shows there are 46 fewer ISA options on the market compared to December 2023.
Also, MoneyWeek has been tracking the best ISA rates and has found that 15 fixed ISAs have dropped rates just this month (including ISAs fixed for one to three years), and five products have been withdrawn.
Easy-access ISAs have been falling at a slower rate, with only two deals dropping in rate this month so far:
Moneyfacts data also shows the average one-year fixed bond fell for a third consecutive month to 4.87%. This is the first time the average has dipped below 5% since July 2023.
“The significant cuts seen across fixed rate bond and fixed ISA rates month-on-month are the biggest recorded in almost 15 years. This will no doubt come as a shock for savers who use these accounts to earn a guaranteed return on their hard-earned cash and have waited a couple of months to invest,” Springall adds.
MoneyWeek has seen 25 savings providers cut the rates on one-year fixed bonds in the new year, and four deals pulled.
Currently, the top one-year fixed saver is from SmartSave, offering 5.16% AER on a minimum deposit of £10,000.
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Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Vaishali has a background in personal finance and a passion for helping people manage their finances. As a former staff writer for MoneyWeek, Vaishali covered the latest news, trends and insights on property, savings and ISAs.
She also has bylines for the U.S. personal finance site Kiplinger.com and Ideal Home, GoodTo, inews, The Week and the Leicester Mercury.
