We've said before that this year looks set to see the worst ISA season on record, and our latest figures provide yet more evidence that things are living up to our woeful expectations: ISA rates have once again hit rock-bottom lows, fuelled by the number of heavy cuts vastly outweighing any rises, with a whopping 90% of recent rate changes being cuts.
Since January, Moneyfacts has recorded 151 rate changes for ISAs, of which 136 were rate cuts and just 15 were rate rises. There has also been a drop in the number of deals available, despite a few challenger brands entering the playing field.
As a result, today the average ISA pays just 1.29%, a fall from 1.45% a year ago and 2.39% five years ago. As the table below shows, things were beginning to look up a mere six months ago, but now, they're categorically worse:
"It's safe to say that ISA season has failed to make an appearance this year," said Rachel Springall, finance expert at Moneyfacts, "with a combination of rock-bottom interest rates and a fall in the number of ISAs available meaning that many savers will lack the incentive to grab a new deal.
"However, this doesn't mean that savers should forget about their accounts, but rather, it becomes even more imperative for consumers to review their savings rates: with some ISAs paying a disastrous 0.10%, plenty can be gained by moving to a more competitive rate of interest."
It may seem as though moving won't be worthwhile, but with rates the way they are, anything is better than nothing – and there are still some good deals to be found if you check out our best buys. But, you'll need to be quick: these great deals won't be around for long because providers get inundated by consumer demand, which means they either need to cut rates or remove their offer from the market. This triggers a domino effect among other providers, and it's this which has sent the market into freefall.
There are other benefits to consider in this market, too, as Rachel explains: "Grabbing a Help to Buy ISA is a must for any prospective homebuyer. The interest rates beat all other ISA deals into the ground; paying up to 4%, it's easy to see why these accounts are a great addition to the market. Help to Buy ISAs have also been the only deals to be boosted by significant rate rises, with both Santander and Yorkshire Bank upping their rate this year to pay 4% and 2% respectively.
"Despite a landslide in interest rates and the launch of the Personal Savings Allowance, ISAs are still a worthwhile addition to any saver's portfolio, particularly over the long term. There are more benefits to come, too, as in 2017 the new Lifetime ISA will enable savers to boost their pot not only for buying a home, but also to provide for the future."
Compare ISAs to see if you can get a better deal
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.