Highest ISA fixed rates still available
ISA savers will be pleased to see that despite the economic challenges caused by the Coronavirus pandemic, many of the top ISA rates are still available in the charts this week. Those looking to get the best ISA rates overall should look towards the fixed rate ISA charts, which continue to offer the most competitive rates in this sector.
While correct at the time of writing, savers should note that the ISA deals given below can change or be withdrawn without warning.
Top fixed rate ISAs
Shawbrook Bank offered the best rate overall with its 7 Year Fixed Rate Cash ISA Bond Issue 1 paying 1.65% gross on anniversary. Shawbrook Bank also topped the five-year chart this week, paying 1.61% gross on anniversary on its 5 Year Fixed Rate Cash ISA Bond Issue 21 and the two-year chart, with its 2 Year Fixed Rate Cash ISA Bond Issue 37 paying 1.48% gross on anniversary. There are also versions of all these ISAs that pay interest monthly at a slightly lower gross rate.
This week, Marsden Building Society topped the three-year fixed rate ISA chart paying 1.55% gross yearly on its Fixed Rate Cash ISA (Issue 122).
There’s a lot more detail, including the top easy access and notice ISA deals this week, to be found in the online story. Alternatively, the very latest deals can be found in our ISA comparison charts…
Product Spotlight: Three-year fixed rate ISAs
ISAs enable you to take advantage of your tax-free cash ISA allowance, while three years is a good trade-off between not locking your money away for a long time and getting a decent interest rate on your savings.
• Top is Shawbrook Bank’s 3 Year Fixed Rate Cash ISA Bond Issue 20 offering a return of 1.52% AER paid on the anniversary of opening on a minimum investment of £1,000. However, there is also an option paying interest monthly at a slightly reduced rate of 1.51%. This ISA allows further additions while the account is still available, and early access is subject to 270 days’ loss of interest. Transfers-in from both cash and stocks & shares ISAs are permitted. Finally, this ISA must be opened online but can then be managed by phone as well.
• Aldermore takes second spot with its 3 Year Fixed Rate Cash ISA offering an interest rate of 1.35% AER for a minimum deposit of £1,000, paid on the anniversary of opening. For those looking for a regular income, there is a monthly option paying a slightly reduced rate. Withdrawals are permitted but early access incurs a loss of 180 days’ interest. Further additions are permitted for 14 days after opening, as are transfers-in from cash ISAs, stocks and shares ISAs and Help to Buy ISAs, but transfers-in must be done within 10 days of account opening. This ISA can only be opened and managed online.
• Coventry Building Society’s Fixed Rate ISA (103) also offers a rate of 1.35% AER on a minimum deposit of just £1, with interest paid yearly until it matures on 31 May 2022. Further additions can be made within 14 days or while the account remains available, but early access will result in 180 days’ loss of interest. Transfers-in from cash ISAs, stocks and shares ISAs, Lifetime ISAs (as well as Lifetime stocks and shares ISAs) and Help to Buy ISAs are welcome. This ISA can be both opened and operated in branch, online, by post or phone.
Top products – At a glance
Coronavirus delays mortgage rate reductions
Borrowers may have expected mortgage rates to automatically fall after the Bank of England cut base rate to 0.10% on the 19 March, but the impact of Coronavirus and the demands this has placed on lenders resulted in delays for rate reductions to reach the market. Tracker mortgage rates also increased in March, before declining in April and product availability has also reduced.
Our research for the period of 11 March to 14 April shows that average mortgage rates for all loan-to-value (LTV) ranges have reduced from an overall average of 2.59% to 2.41%. Only 0.01% of this reduction came between the base rate reductions and the end of the month, while the remaining 0.18% reduction happened from the 2 April to 9 April – after which, rates appear to have stabilised for now.
The average rate for a two-year tracker mortgage across all LTVs has reduced from 2.03% to 1.86%. At the same time, the average two-year fixed mortgage rate has reduced from 2.43% to 2.19% and five-year averages dropped from 2.73% to 2.48%.
There are now 2,438 mortgage products available in the UK, a 46% reduction during the period. Of these, tracker mortgages were hardest hit, losing 67% of products, standing at a total of 96. Borrowers wanting longer-term tracker mortgages will be disappointed as only two-year trackers are currently available.
Can borrowers still get a good mortgage deal?
Most borrowers should be able to remortgage to either a new or their existing lender. Lenders are adjusting their processes, including the use of automated valuations to make sure they can complete remortgages during the Coronavirus pandemic.
Product Spotlight: Three-year fixed rate remortgages
If you’re looking to remortgage and are seeking a little more repayment security than a two-year mortgage, a three-year fixed rate deal could be the answer.
• HSBC’s fixed deal leads the pack with an interest rate of 1.34% (3.1% APRC) fixed to 30 June 2023, before reverting to 3.54% variable for the rest of the term. This deal has a maximum loan-to-value (LTV) of 60% on a loan value of £10,000 to £5 million and is open to all borrower types. Incentives include free valuation for all and free legal fees for remortgagers only, while product fees are £999.
• Second position goes to Nationwide Building Society’s fixed rate deal offering a rate of 1.44% (3.2% APRC) fixed for three years, after which it reverts to 3.59% variable for the remainder of the term. This remortgage has a maximum LTV of 60% and requires a loan of between £25,000 and £1 million. It carries a product fee of £999, while incentives include free valuation, as well as a choice of either £500 cashback on completion or free legal fees.
• HSBC takes third place with its fixed mortgage deal offering a rate of 1.44% (3.1% APRC) fixed to 30 June 2023, before reverting to 3.54% variable for term. This deal, which is open to all borrower types, has a maximum LTV of 75% on a loan value of £10,000 to £2 million. Incentives include free valuation, while those remortgaging also get free legal fees. The product fee for this deal is £999.
Tax-free allowances, limits and tax relief for 2020/21
How much can be earned before paying tax?
In England and Wales, those who earn less than £100,000 in the tax year will still receive the first £12,500 of their income tax-free. The £1,250 marriage allowance stays the same – this allows a non-taxpayer to transfer £1,250 of their personal allowance to their partner if their partner is a basic rate taxpayer.
In England and Wales, the income tax rate for basic rate taxpayers earning between £12,501 and £50,000 is 20%. Higher rate taxpayers, earning between £50,001 to £150,000 pay 40%, while additional rate taxpayers earning in excess of £150,001 pay 45%.
Find out the income tax bands for Scotland by reading Moneyfacts’ Taxfacts.
How much can be saved into an ISA?
The ISA limit remains at £20,000 for the 2020/21 tax year. This is the maximum amount savers can deposit into a cash ISA, stocks and shares ISA and/or innovative finance ISA. The limit for a Junior ISA has increased from £4,368 to £9,000 per year. Lifetime ISAs remain at a maximum of £4,000 per year.
What is the maximum pension contribution?
The maximum annual allowance for pension contributions remained static at your annual salary, up to a maximum of £40,000 per tax year.
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