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Published: 18/10/2017

Cash ISAs haven't had it easy in recent years, particularly since the Personal Savings Allowance (PSA) decimated the market. ISA rates have since plummeted as consumers questioned the value of these accounts, but happily, it looks as though the tide could be turning, as our latest figures show that both rates and availability are on the up!

Rising rates

The figures, taken from the latest Moneyfacts UK Savings Trends Treasury Report, show that fixed rate ISAs have enjoyed the largest rate increases of the entire savings market this month, with the average one-year cash ISA rate rising by 0.04% to stand at 1.04%, and the long-term equivalent up by 0.03% to 1.32%.

This marks the second consecutive month in which both rates have risen, and brings them to the highest levels seen since August 2016, when they stood at 1.09% and 1.38% respectively – which, significantly, means that they're not far from the averages seen prior to the base rate cut last year.

The same can't quite be said for the variable rate sector, but even here there's an improvement, with the average no notice ISA rate remaining unchanged at 0.63% (it isn't a rise, but it's not a fall either!), while the notice equivalent has risen by 0.04% to 0.79%, the highest seen since December last year.

The table below highlights the recent movement in more detail, and as you can see, rates have come a long way in the last few months; variable rates may not have recovered to the same level as a year ago, but in the fixed market, they've stormed ahead.

  October 2016 April 2017 September 2017 Today
Average no notice ISA rate 0.77% 0.62% 0.63% 0.63%
Average notice ISA rate 0.92% 0.70% 0.75% 0.79%
Average one-year ISA rate 0.95% 0.92% 1.00% 1.04%
Average long-term ISA rate 1.07% 1.15% 1.29% 1.32%

More to choose from

In even better news, not only have rates been rising, but so has availability, with there now being more cash ISAs to choose from than there have been in years.

Indeed, the number of cash ISAs available has risen by 13 this month to stand at 383, the highest figure since June 2012 (when 390 were available) and not far from the peak of 418 recorded in May 2012. This means that availability has hit a five-year high, and it's all thanks to challenger banks.

This has been a recurring theme in recent years, as these challengers are still the only banks who need our cash, with high street brands practically non-existent in the Best Buys. Our data shows that several banks and building societies launched new ISAs and increased rates on existing products this month, including Charter Savings Bank, who currently tops the variable rate ISA chart, and Virgin Money, who leads the way in the fixed rate ISA sector.

Meanwhile, high street brands have gone in the opposite direction, with the only banks to reduce their no notice ISA rates this month being Bank of Scotland and Lloyds Bank. This further highlights the continued lack of desire for big brands to compete, and shows that you really do need to think outside the box if you want to snap up the best cash ISA rate possible.

So why not make the most of the market? Now could be a great time to get in on the action, with rising rates and greater product choice meaning you've got plenty of top options to choose from if you're looking to boost your tax efficiency. Start by comparing the best cash ISAs to get a feel of what's out there, or use our savings search tool for a more personalised overview.

Remember, you'll probably find that challengers and mutuals are your best bet, but considering they have the same financial protection as the big high street brands, there's no reason not to give them a go.

What next?

Compare cash ISAs


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