The latest Moneyfacts UK Savings Trends Treasury Report highlights intensifying competition among providers during ISA season, with rates rising across both variable and fixed products. However, while improved returns may support short-term cash positioning, inflation continues to pose a risk to real returns, reinforcing the need for careful portfolio balance.
Caitlyn Eastell, Personal Finance Analyst at Moneyfacts, said:
“This year the competition around ISA season was particularly strong, fuelled by the fact that for savers under 65 it’s the final year for them to utilise their full £20,000 allowance. Providers have been enticing new deposits with attractive deals, as a result the total cash ISA product number has seen its largest monthly rise since May 2024 and stands at a record-breaking 712 deals.
Savers should be taking advantage of this all-time high, and it may be especially timely as the new tax-year is the perfect window to review their current deal and switch to ensure they can maximise their returns before thresholds tighten. For the first time in almost three years, notice ISAs are outperforming their non-ISA counterparts, paying 3.31% and 3.26% respectively on average.
While to some savers these may be a more niche option, they can provide a helpful middle ground for those seeking higher tax-free returns without the sacrifice of the total lock-in of a fixed bond.
The number of savings deals paying above the Bank of England base rate has surged to its highest level since December 2021. While this could largely be driven by base rate remaining unchanged at 3.75% for several months, providers have also been proactively adjusting rates in response to shifting interest rate expectations.
Markets have pivoted from the rate cut mindset seen earlier this year to a ‘higher for longer’ stance, or even potential rises, as the ongoing tensions in the Middle East threaten a fresh inflationary shock. Fixed rates reflect this change, with the average one-year ISA rising to over 4%, reaching its highest point since May 2025, while its non-ISA counterpart saw its biggest increase since September 2023.
Savers may enjoy more competitive returns in this environment; however, it can be a tricky balancing act because sharp spikes to household bills and inflation could quickly catch up, meaning savers may be left out of pocket.”
