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Number of cash ISAs available hits five-year high

Number of cash ISAs available hits five-year high

Category: ISAs

Updated: 15/05/2017
First Published: 15/05/2017

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The ISA market has been in the doldrums for some time, but thankfully, it looks as though there's some improvement on the horizon, with our latest research revealing that the number of cash ISAs available has risen for another month to hit a five-year high!

That's according to figures contained in the latest Moneyfacts UK Savings Trends Treasury Report, due to be published later this week. As the table below shows, the number of cash ISAs on the market has risen by 39 this month to hit 366, a notable increase from this time last year and the highest total seen since May 2012, suggesting that this year's ISA season hasn't been such a washout after all.

May-12
May-15 May-16 May-17
Total number of Cash ISA Products 418 333 324 366
Source: Moneyfacts.co.uk

"Compared to previous years' ISA seasons, 2017's was much better than expected," said Charlotte Nelson, finance expert at Moneyfacts. "Savers now have more choice than before, with the number of ISAs increasing by 39 in just one month, which also marks the highest increase we've seen since May 2011.

"There is little difference between this year's savings environment and 2016's, making this boost in products a welcome break in the recent downward trend. While it may seem unclear what has changed, the fact that £80 billion was subscribed to ISA accounts in the 2015-16 tax year (according to figures from HMRC) perhaps means that providers are now seeing the benefit of offering a product in this area."

This isn't the only possible reason behind the latest wave of activity, with further analysis suggesting that, while providers may not be actively seeking savers' cash, they don't necessarily want to lose it, either.

As Charlotte explains, ISAs are often seen as one-year products, which means many savers could be coming to the end of a fixed deal during ISA season after investing their tax-free allowance the previous year. This means providers could potentially lose a substantial chunk of their customer base in one go if savers look elsewhere, so "by launching ISA deals, providers were most likely attempting to retain some of their existing savers' funds, while also attracting new money".

It's therefore little wonder the main focus of providers' attention has been on the one-year fixed rate ISA arena, with much of the recent activity focused on this sector of the market. Indeed, not only do savers flock to this sector, but given the uncertainty currently pervading the economy, banks may not want a vast amount of funds over the longer-term, making one-year deals attractive from all angles.

However, that's not to say that everything's rosy. "Whilst savers will now find there are more products on the market, they will be sorely disappointed in the rates they can get," added Charlotte. "With the average non-ISA long-term fixed rate standing at 1.40%, savers would be 0.26% worse off if they opted for an ISA instead. This is a blow to ISA savers when you consider that the Personal Savings Allowance now makes a standard savings account a tax-free option for many as well.

"So, although the ISA market has been boosted, the lack of fight among providers to offer top-paying deals is disappointing. Savers will have to work through the maze to see if they can still benefit from the ISAs on offer."

What next?

Availability may have risen, but that's not to say it's easy to find a good deal. That's why you need to do your research – check out our Best Buys or savings search tool to find the best cash ISAs available, and see if you can find the ideal home for your tax-free allowance.

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.

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