Halifax slash 4% ISA rate - time to look elsewhere

06th May 2016

Halifax has slashed the rate for new savers on it's popular Help to Buy ISA from a market busting 4% AER down to 2.50%. The move, although disappointing, was not wholly unsurprising given its lead in the Help to Buy ISA market for so long, leaving us wondering earlier in the year why any saver would go anywhere else to save into a Help to Buy ISA.

As one of the few providers to participate in the Help to Buy ISA scheme Halifax led the way when it launched at 4% AER back in December last year. Its nearest rival at the time offered 3% AER, well below Halifax. As Halifax undoubtedly pulled in the vast majority of the Help to Buy ISA customers, they have clearly decided to stem the flow of applications. The good news is that Santander decided to take up the baton and increase the rate on its Help to Buy ISA back in March from 1.5% AER and 2% AER (for it's 123 version) to now pay 4% AER for all customers. Added to this, smaller provider Penrith Building Society is also offering 4% AER from April, available to all.

How long these accounts will be available for at these higher rates remains to be seen but with Halifax effectively out of the market, we suspect Penrith Building Society may not be far behind and Santander will then solely hold the top spot, a position that's unlikely to last for the longer term. Grab the deals while you still can!

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