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ISA season unclear as variable rates stagnate

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Rachel Springall, Press Officer
Rachel Springall, Press Officer / Finance Expert T: 01603 476210 E: Email Rachel
15/02/2022

ISA season unclear as variable rates stagnate

ISA season unclear as variable rates stagnate

Moneyfacts UK Savings Trends Treasury Report data shows no change to the average easy access ISA and notice ISA rate for the third month running, but long-term fixed bonds and ISAs rose for the eighth consecutive month.

Moneyfacts UK Savings Trends Treasury Report data shows no change to the average easy access ISA and notice ISA rate for the third month running, but long-term fixed bonds and ISAs rose for the eighth consecutive month.

  • The average one-year bond rate rose month-on-month to 0.82% and is at its highest since June 2020 (0.86%). The average long-term fixed bond rate rose to 1.22%, the highest since April 2020 (1.28%).
  • The one-year fixed ISA rate rose to 0.59%, its highest since October 2020 (0.62%). The longer-term fixed ISA rate rose month-on-month to 1.04%, surpassing 1% for the first time since May 2020 (1.07%).
  • The average easy access rate rose to 0.21%, its highest since November 2020 (0.22%) and the average notice rate fell to 0.54%, the first fall since April 2020 and now the lowest seen since October 2021 (0.54%). The easy access and notice ISA rates remained unchanged month-on-month for the third month running, but are at their highest since December 2020 (0.27%) and February 2021 (0.40%) respectively.
  • Product choice overall has grown by 215 deals year-on-year, to 1,602 savings deals (including ISAs). ISA product choice has grown year-on-year by 56 deals to 379.
  • The average one-year bond rate rose month-on-month to 0.82% and is at its highest since June 2020 (0.86%). The average long-term fixed bond rate rose to 1.22%, the highest since April 2020 (1.28%).
  • The one-year fixed ISA rate rose to 0.59%, its highest since October 2020 (0.62%). The longer-term fixed ISA rate rose month-on-month to 1.04%, surpassing 1% for the first time since May 2020 (1.07%).
  • The average easy access rate rose to 0.21%, its highest since November 2020 (0.22%) and the average notice rate fell to 0.54%, the first fall since April 2020 and now the lowest seen since October 2021 (0.54%). The easy access and notice ISA rates remained unchanged month-on-month for the third month running, but are at their highest since December 2020 (0.27%) and February 2021 (0.40%) respectively.
  • Product choice overall has grown by 215 deals year-on-year, to 1,602 savings deals (including ISAs). ISA product choice has grown year-on-year by 56 deals to 379.
Savings Treasury Report Savings Treasury Report Savings Treasury Report

 

Savings market analysis – average rates

 

Feb-20

Feb-21

Jan-22

Feb-22

Average easy access rate

0.56%

0.17%

0.20%

0.21%

Average easy access ISA rate

0.83%

0.24%

0.26%

0.26%

Average notice rate

1.04%

0.36%

0.57%

0.54%

Average notice ISA rate

1.13%

0.40%

0.37%

0.37%

Average one-year fixed rate bond

1.17%

0.46%

0.80%

0.82%

Average longer-term fixed rate bond*

1.43%

0.68%

1.16%

1.22%

Average one-year fixed rate ISA

1.12%

0.42%

0.57%

0.59%

Average longer-term fixed rate ISA*

1.34%

0.61%

0.97%

1.04%

*Longer-term fixed bonds or ISAs are those with terms over 550 days. Average interest rates based on a £5,000 deposit as at the start of the month.

Source: Moneyfacts Treasury Reports

 

Savings market analysis – product count

 

Feb-20

Feb-21

Jan-22

Feb-22

Number of live savings account options (excluding ISAs)

1,380

1,064

1,252

1,223

Number of live ISA options

405

323

388

379

Source: Moneyfacts Treasury Reports

 

Savings market analysis – average rates

 

Feb-20

Feb-21

Jan-22

Feb-22

Average easy access rate

0.56%

0.17%

0.20%

0.21%

Average easy access ISA rate

0.83%

0.24%

0.26%

0.26%

Average notice rate

1.04%

0.36%

0.57%

0.54%

Average notice ISA rate

1.13%

0.40%

0.37%

0.37%

Average one-year fixed rate bond

1.17%

0.46%

0.80%

0.82%

Average longer-term fixed rate bond*

1.43%

0.68%

1.16%

1.22%

Average one-year fixed rate ISA

1.12%

0.42%

0.57%

0.59%

Average longer-term fixed rate ISA*

1.34%

0.61%

0.97%

1.04%

*Longer-term fixed bonds or ISAs are those with terms over 550 days. Average interest rates based on a £5,000 deposit as at the start of the month.

Source: Moneyfacts Treasury Reports

 

Savings market analysis – product count

 

Feb-20

Feb-21

Jan-22

Feb-22

Number of live savings account options (excluding ISAs)

1,380

1,064

1,252

1,223

Number of live ISA options

405

323

388

379

Source: Moneyfacts Treasury Reports

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.”

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Contact Us If you're looking for extra comment, a chart or more information, then please give us a call. We are always more than happy to help.
Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert