ISA season – broadly speaking the last month before the new tax year – is nearly upon us. While we're not expecting much this year, with rates still largely at record lows, this week's UK Savings Trends Treasury report did show that the average long-term ISA rate is up, and has been rising for the last three months. Could this ISA season not be a complete dud after all?
Earlier in the week, we reported that the long-term average fixed rate had risen for the first time. This wasn't the only sector that has seen a rise, however, with the long-term fixed ISA rate also seeing an increase, from 1.00% to 1.01%. While this 0.01% rise will to most people seem miniscule, it marks the third month in a row that the average has increased by this amount.
Unlike in the long-term fixed bond market, challenger banks are largely absent from the fixed rate ISA market. Instead, it has been the more established savings market incumbents who have been making tentative upward movements. And of course you, the consumer, also has a lot to do with the recent increases.
With the end of the tax year just around the corner, consumers are starting to look for the best place to leave their tax-free savings and use up their annual allowance before it's too late. That said, providers aren't enthusiastic enough about savers' interest to make this ISA season exciting, with the report still expecting a general lack of significant movement.
Indeed, it's bad news for the average one-year ISA rate, which fell by 0.02% for the third consecutive month to stand at 0.81%, and even worse news for the average no notice ISA rate, which slipped by 0.03% to 0.64%. The notice ISA rate thankfully remained unchanged at 0.75% – a small blessing in a hard market.
Overall, the number of accounts paying more than the Bank of England Base Rate of 0.25% increased by 12 this month, taking the total to 1,122, and the ISA market expanded by three products to 296. So there is still choice in the market.
With only small rises being seen, and indeed more significant cuts in most areas of the ISA market, it's still important to do your research. Check out the ISA Best Buys to see if there's a rate that's right for you, and see if you can make the most of your ISA allowance.
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 Any products featured may be withdrawn by their provider or changed at any time.