Rachel Springall, Finance Expert at Moneyfacts, said:
“Savers who are looking to lock into a fixed rate account for a year or more may be pleased to see average rates rise month-on-month. However, consumers who are starting to compare ISAs will notice a stark difference between average fixed ISA returns compared to fixed bonds, and those looking at easy access ISAs and notice ISAs will be disappointed to see the rates stagnate for the third month running. This does not bode well for a bustling ISA season, but with base rate rising, many savers may hope to see rates rise in the weeks to come, but there is no guarantee this will come to fruition.
“There are now more providers offering live products within the savings market than we have seen since our records began in 2007. However, out of the 134 savings providers, only 86 offer an ISA. As it stands there are therefore 48 providers who do not currently offer an ISA product, and this has risen from 38 year-on-year. Savers may then see brands offering more competitive returns outside of an ISA wrapper, but they will need to consider any Personal Savings Allowance (PSA) if they are chasing the top returns, particularly when it comes to fixed rates. ISA choice has grown year-on-year, which is positive compared to the catastrophic fall of 82 ISA options between 2020 and 2021. There are 56 more options now than in February 2021, but still 26 fewer than in February 2020. So, despite choice returning since February 2020, rates still have a way to go to echo those offered before the pandemic.
“According to the Bank of England, there was an outflow from Cash ISAs for the 11th consecutive month, bringing the total outflow during 2021 to almost £4.5 billion. In addition, during December there was an inflow of just over £1.8 billion into sight deposits. As interest rates fell to record lows on average in 2021, and the market is adapting to two base rate rises, savers may well be turning to accounts where they can quickly access their cash for peace of mind. It is difficult to predict whether it would be a premature move for savers to lock into a deal now or if it is wiser to grab a more flexible option and see if rates rise in the weeks to come.”
Rachel Springall, Finance Expert at Moneyfacts, said:
“Savers who are looking to lock into a fixed rate account for a year or more may be pleased to see average rates rise month-on-month. However, consumers who are starting to compare ISAs will notice a stark difference between average fixed ISA returns compared to fixed bonds, and those looking at easy access ISAs and notice ISAs will be disappointed to see the rates stagnate for the third month running. This does not bode well for a bustling ISA season, but with base rate rising, many savers may hope to see rates rise in the weeks to come, but there is no guarantee this will come to fruition.
“There are now more providers offering live products within the savings market than we have seen since our records began in 2007. However, out of the 134 savings providers, only 86 offer an ISA. As it stands there are therefore 48 providers who do not currently offer an ISA product, and this has risen from 38 year-on-year. Savers may then see brands offering more competitive returns outside of an ISA wrapper, but they will need to consider any Personal Savings Allowance (PSA) if they are chasing the top returns, particularly when it comes to fixed rates. ISA choice has grown year-on-year, which is positive compared to the catastrophic fall of 82 ISA options between 2020 and 2021. There are 56 more options now than in February 2021, but still 26 fewer than in February 2020. So, despite choice returning since February 2020, rates still have a way to go to echo those offered before the pandemic.
“According to the Bank of England, there was an outflow from Cash ISAs for the 11th consecutive month, bringing the total outflow during 2021 to almost £4.5 billion. In addition, during December there was an inflow of just over £1.8 billion into sight deposits. As interest rates fell to record lows on average in 2021, and the market is adapting to two base rate rises, savers may well be turning to accounts where they can quickly access their cash for peace of mind. It is difficult to predict whether it would be a premature move for savers to lock into a deal now or if it is wiser to grab a more flexible option and see if rates rise in the weeks to come.”
