Hopeful first-time buyers with Halifax’s previously market leading Help to Buy Isa will see the amount they earn in interest cut from 8 December.
Help to Buy Isas enable first-time buyers to save for their required mortgage deposit, with the government topping up savings by 25% up to a maximum of £3,000 when they come to buy a property.
But despite cutting the rate on its Help to Buy Isa twice since its launch in December 2015 for new customers, Halifax has today confirmed that existing customers will also now be hit.
Here’s what’s happening:
- I took out the account between December 2015 and 22 May 2016: Your rate will be cut from 4% to 3.5%.
- I took out the account between 23 May and 22 August 2016: Your rate will fall from 2.5% to 2.25%.
- I took out the account between 23 August 2016 and now: Your rate will remain at 2%. The interest rate for new customers will also remain at 2% for now, however this is a variable rate meaning it could change at any time.
However, despite the rate cut – which Halifax blames on the recent base rate cut, you’re unlikely to earn more by transferring your cash elsewhere.
The highest paying Help to Buy Isa open to all, which allows transfers in from other Isas, is Barclays, paying 2.27%, according to comparison website SavingsChampion.co.uk.
However, be aware that this rate is variable, meaning it too could be cut at any time.
A spokesperson for Halifax 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 which include the Help to Buy ISA.”
Halifax wouldn’t tell us how many customers are affected by this move, as it says the figures are commercially sensitive.