ISA rates fall but competitive rates are still available | moneyfacts.co.uk

Derin Clark

Derin Clark

Online Reporter
Published: 30/03/2020

Savers looking to benefit from increasing ISA rates as we enter the final week before the new tax year will be disappointed to see that average ISA rates have fallen this month, however there is hope as competitive rates are still available.

In fact, our research has found that average rates on easy access ISAs, notice ISA, as well as one, two and five year fixed rates ISAs have all fallen since the start of the month, despite this being traditional ISA season. The average rate on an easy access ISA has fallen by 0.03% in the last four weeks, while average notice ISA rates have fallen by 0.04% during this same period. In addition to this, the average one, two and five year fixed rate ISA rates have fallen by 0.09%, 0.12% and 0.18% respectively since the 2 March 2020.

Average ISA rates during March 2020

  Easy access ISA Notice ISA One year fixed rate ISA Two year fixed rate ISA Five year fixed rate ISA
2 March 2020 0.83% 1.13% 1.14% 1.18% 1.47%
9 March 2020 0.84% 1.13% 1.13% 1.19% 1.46%
16 March 2020 0.83% 1.13% 1.13% 1.14% 1.45%
23 March 2020 0.81% 1.12% 1.07% 1.10% 1.44%
30 March 2020 0.80% 1.09% 1.05% 1.06% 1.29%

Why have ISA rates fallen?

Traditionally, during March many providers will launch their most competitive ISA rates, however this year the Coronavirus outbreak has had such an impact on the economy it resulted in the Bank of England making two base rate cuts in consecutive weeks. On the 11 March 2020, the Bank of England cut base rate to 0.25%, while a week later 19 March 2020 base rate was cut again to 0.10%, its lowest level in history. These base rate cuts, along with general uncertainty about the economy, may have made providers reluctant to launch new competitive ISAs this month or increase the rates on existing ISA products. As a result, many savers hoping to make the most of the 2019/2020 tax year ISA limit before it ends on the 5 April will be disappointed to see that, while some top ISA rates have held this month, there was not the same level of competition that is often seen at this time of year.

Are there still competitive ISA rates available?

Saying this, there are still some competitive ISA rates available in the charts. Savers looking for the most competitive rates will have to look to the fixed rate ISA charts, with the five year chart offering the best rate overall of 1.60%, which is being offered by Paragon Bank on its 5 Year Fixed Rate Cash ISA. For those who do not want to lock their money away for a long period of time, the best rate on a two year fixed rate ISA is being offered by Al Rayan Bank, which pays an expected profit rate of 1.50% on is Fixed Term Deposit Cash ISA. Virgin Money pays the best rate in the one year fixed rate ISA chart with both its 1 Year Fixed Rate Cash E-ISA Issue 421 and 1 Year Fixed Rate Cash ISA Issue 442 paying 1.36%.

The best rate in the easy access ISA chart is currently being offered by Al Rayan Bank, which pays an expected profit rate of 1.36% on its Instant Access Cash ISA. In the notice ISA chart, the top rate on an ISA without opening restrictions comes from Paragon Bank, which pays 1.31% on its 120 Day Notice Cash ISA – Issue 1.

Commenting on the fall in ISA rates Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “Although rates have been falling this last month, for those willing to shop around and keep a close eye on the top rate tables, there are still some competitive options available.

“Savers may want to consider some of the challenger banks and less familiar brand names or, if they are able to play a long game and are happy to lock their funds away into a fixed rate ISA for a period of time, then these are an option to secure the highest available returns.

“However, easy access ISAs may offer flexible access to funds, which could be a priority to some in the coming weeks. Savers should keep in mind, however, that the flexibility of an easy access ISA is usually balanced by lower returns, so this will need to be considered carefully.

“In an ever-evolving market, savers may do well to act quickly and secure an account before it is withdrawn.”

Best ISA rates

To see all the current best ISA rates visit our easy access, notice and fixed rate ISA charts.

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.

ISA document

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