Halifax will once again chop the interest rate offered on its Help to Buy ISA to as low as 2% for new customers from 8 December this year, but this time existing customers will also feel the pinch.
In May, the bank confirmed it was slashing the rate on its Help to Buy ISA from 4% to 2.5% for new customers. However, it's now made the decision to further cut the rate to 2% for new customers and those who took out its Help to Buy ISA after 23 August, while it's also reducing what it offers to its longer-term savers.
If you opened a Halifax Help to Buy ISA between December 2015 and 22 May 2016, you'll currently be enjoying an interest rate of 4%. That is to be cut to 3.5% from 8 December. If you opened your Halifax Help to Buy ISA between 23 May and 22 August, your rate will fall from 2.5% to 2.25%.
Up until its initial rate reductions in May, Halifax's Help to Buy ISA paid the joint top rate of 4% tax-free. For more on how the Help to Buy ISA works, plus how the top picks now stack up, see our Help to Buy ISAs guide.
How will the changes affect me?
Unfortunately, all Halifax customers will be impacted by the rate changes to its Help to Buy ISA. The extent of your rate reduction will depend on when you opened your Help to Buy ISA:
- Opened the ISA between December 2015 and 22 May 2016 – rate drops to 3.5% from 4% from 8 December.
- Opened the ISA between 23 May and 22 August – rate drops to 2.25% from 2.5% from 8 December.
- Opened the ISA between 23 August and now – rate drops to 2% from 2.5% from 8 December.
Why has Halifax cut the interest rate again?
A Halifax spokesperson says: "We regularly review our savings range and make changes in line with the market and our competitors. In line with our previous announcements following the Bank of England base rate cut, we are reducing the rates for our existing customers with variable rate accounts.
"We are writing to all affected customers to give at least two months' notice of these rate changes, in order to provide them with the opportunity to change accounts should they wish to do so."
What are the best value ISAs currently available to new customers?
We believe the following Help to Buy ISAs are currently the best available:
- Barclays pays the top open-to-all Help to Buy ISA rate at 2.27; you can open the account with just £1 and can manage it online (if registered).
- Buckinghamshire BS pays the next highest open-to-all Help to Buy ISA rate at 2.25%. You can also open it with just £1.
- The Nationwide Help to Buy ISA also pays 2%, yet it's one of few that offers a 'split ISA', meaning you can get a Help to Buy ISA and cash ISA together.
- The Aldermore Help to Buy ISA pays 1.75%, and offers a 'split ISA' too.