After the Bank of England’s Monetary Policy Committee (MPC) voted to cut rates by 0.25 per cent to 4.25 per cent earlier this month, many providers have been rushing to re-price their offerings.
Now the average easy access ISA rate has fallen slightly to 3.02 per cent from 3.34 per cent the same time last year.
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Although the falls have been minor in the past month, experts warn more cuts are to come across both ISA and other savings rates.
“The reduction in the average longer-term fixed bond and ISA rates noted the most significant falls for over six months, and is a disheartening turn of events after they rose above 4 per cent at the start of April.
“Cash ISA rates have fallen but savers would be wise to take advantage of their ISA allowance regardless of any rate volatility in the months to come.”
Cost of living pressures mean consumers need to shake any apathy aside and start building a healthy habit that provides attractive returns to avoid receiving a raw deal, experts say.
This is why savers should think about locking in rates sooner rather than later before they drop even further as experts have predicted.
He said: “I think it’s unlikely that any changes to the current ISA rules, even if they announced this autumn, will come into force until the next tax year but with the Chancellor still pushing the faster and further mantra, you never know what she may pull out of her hat.
Anna Bowes, personal finance expert at The Private Office, said: “An interesting recent development is that the rates on all terms have become closer aligned lately, making longer-term fixes more attractive than they have been for a while.
“With the recent uptick in inflation, even though further base rate cuts may be delayed, the overall trajectory still seems to be downward.
James Blower, founder of The Savings Guru, added: “ISAs are likely to continue to fall back as expectations are that base rate will be cut at least two more times this year, if not three, and will settle at 3.5 per cent in 2026.
Savers are not being deterred by the talk of threats to cash ISA allowances, Blower pointed out, in fact the opposite.
“We know that the Chancellor is reviewing ISAs and that there’s likely to be changes to them in the autumn Budget.
“While this tax years allowances won’t be impacted, I do expect changes for the 2026-27 tax year and there’s certainly a risk that the amount which can be saved in cash will be reduced.”
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