Halifax, one of two providers previously offering market leading Help to Buy Isa rates has slashed the interest it’ll pay new customers from 2.5% to 2%.
This is the second time Halifax has cut the rate on its Help to Buy Isa since the account was launched with a headline-grabbing 4% rate in December 2015.
However, Halifax’s rate cut does not affect existing customers, who will continue to get 4% or 2.5%, depending on when they signed up for the account.
Lloyds Bank has also cut its rate for new customers, from 2% to 1.5%. Again, existing customers are unaffected.
The rate cut means Virgin Money is now the market leading Help to Buy Isa provider open to everyone, offering 2.5% interest throughout the UK. This is followed by Barclays at 2.27%.
Some building societies do however, offer as much as 4% to people in their local area. Savers in Cumbria can get 4% with the Penrith Building Society, while the Cumberland Building Society offers 3%. Tipton and Coseley Building Society, which serves people in the West Midlands, pays 3%.
All Help to Buy Isas will give savers a 25% bonus when they finally buy their property, helping them to save their required mortgage deposit earlier.
Reports over the last week have highlighted that the Help to Buy Isa bonus can’t be used for a down payment on the property when you exchange contracts, but for most buyers this shouldn’t be an issue as it can still be used to pay for the mortgage deposit.
A spokesperson for Lloyds Banking Group says: “We regularly review our savings range and make changes in line with the market and our competitors. These changes will not affect existing customers.”