New £15,000 Cash ISA Interest Rates Ahead of 1st July - What to Do?
Personal_Finance / ISA's Jun 26, 2014 - 02:47 AM GMTBy: Nadeem_Walayat
Many savers will have delayed opening a cash ISA for the current tax year so as to best capitalise on the the new cash ISA allowance of near triple the existing amount of £5,490 to £15,000. However, It should not come as a much of a surprise that after more than 5 years of an artificial highly manipulated UK interest rates market for the primary purpose for funneling tax payer cash into the bankrupt banks (QE) that the already extremely low savings rates have have yet again been cut ahead of new ISA's going live on 1st of July.
Sylvia Waycot, Editor at Moneyfacts.co.uk, said: “All hopes were pinned on July being the month our savings might start to offer a worthwhile return, but even the new £15,000 ISA limit has not sparked any interest from providers - literally.
“Shockingly, the average rate on variable and one-year fixed ISAs has fallen since the Chancellor’s announcement in April whereas the non-ISA equivalents have had no such downward movement and non-ISA notice accounts have even risen.
“Only the five-year fixed ISA shows a positive story with the average rate increasing by 0.08% - but with a BoE rate rise imminent it would be an odd time to lock money in a long term fixed account.
“It seems that rather than a subdued ISA market we have a reluctant ISA market, but by providers rather than consumers.
“Whilst this can’t be anything but disappointing for ISA savers, do remember to use as much of the entitlement as you can and if you are worried about getting locked into a long-term fixed rate, keep your savings more liquid in a shorter term - the important thing is it must always be within an ISA wrapper.”
So whilst in one act the Coalition government sought to correct a huge disparity in the ISA market of savers being forced to split their annual ISA allowances between Cash and Shares ISA's by allowing savers to use the whole of their annual allowance towards a cash ISA rather than the existing 50/50 split between cash and shares, and then to boost the cash ISA allowance to £15,000, which compares against the existing cash ISA allowance of just £5,940.
Against this the banking crime syndicate continues to suckle on the teat of the Bank of England through a myriad of schemes that results in effectively providing the banks with unlimited funding that has resulted in the collapse of savings interest rates that began in May 2012 and has been kept at sub inflation rates of systemic theft.
The table below illustrates the cash ISA rates offered by apparently the often reported on as best buy accounts of the Halifax mega-bank that in reality crashed in response to the Bank of England's Funding for Lending Scheme that started in July 2012.
| Halifax ISA's | May 2012 | Sept 2012 | Nov 2012 | Mar 2013 | May 2013 | July 2013 | Mar 2014 | June 2014 | % Cut |
|---|---|---|---|---|---|---|---|---|---|
| Instant Access | 3% |
2.75% |
2.35% |
1.75% |
1.35% | 1.35% | 1.5% | 1.30% | -56% |
| 1 Year Fix | 2.25% |
2.05% |
2.05% |
1.75% | 1.75% | 1.65% | 1.5% | -33% | |
| 2 Year Fix | 4.00% |
3.25% |
2.25% |
2.5% |
2.10% | 2.10% | 2.05% | 1.8% | -55% |
| 3 Year Fix | 4.25% |
3.75% |
2.35% |
3.00% |
2.25% | 2.25% | 2.25% | 2% | -53% |
| 4 Year Fix | 4.35% |
3.80% |
2.40% |
3.05% |
2.30% | 2.30% | 2.40% | 2.10% | -52% |
| 5 Year Fix | 4.50% |
4.15% |
2.60% |
3.10% |
2.35% | 2.35% | 2.5% | 2.20% | -51% |
The table shows that the tax payer bailed out Halifax continues to across the board pay abysmally poor rates of interest that are far below the official UK RPI Inflation rate of 2.4%.
What to do ?
In my opinion savers either continue to effectively hand over their hard earned cash to the banks to systematically siphon off through persistent loss of purchasing power or they look at alternative asset classes such as the UK housing market that is currently trundling along at an average annual percentage rate of FIVE times the pittance that the likes of Halifax pays as covered at length in my New UK Housing Market Ebook available for FREE DOWNLOAD (Only requirement is a valid email address).
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By Nadeem Walayat
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Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
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