Interest rates on cash Individual Savings Accounts (ISAs) are starting to rise, according to BBC News.
Data from Moneyfacts indicates that rates on instant access ISAs rose from 0.68% in December 2017 to 0.78% in February 2018. Rates for fixed-rate ISAs of at least 18 months rose from 1.38% in December 2017 to 1.46% in February 2018.
The rise comes after almost ten years of low interest rates, which put off many potential savers. This outlook is now improving.
Charlotte Nelson, finance expert at Moneyfacts said: “The ISA market may have reached a turning point, with all average ISA rates increasing for a second month in a row.”
Nelson cited the end of the Funding for Lending Scheme for mortgages last month and the closure of the Term Funding Scheme in late February as factors behind the change. These schemes both gave banks and building societies opportunities to borrow at low rates from the Bank of England, making it less attractive to compete for public deposits.
The Bank of England raised base rates in November 2017 to 0.5%. Further rises are expected to follow in 2018.