Recent Moneyfacts figures showed that this is the biggest fall in cash ISA products since 2024 and down from a record high of 662 in September.
The number of savings providers overall is at a record high of 156, Moneyfacts found, and selected ISA product rates have hit their lowest level since 2023 in some instances.
| Savings market analysis – average rates | |||||
| Nov 2023 | Nov 2024 | May 2025 | Oct 2025 | Nov 2025 | |
| Average easy-access rate | 3.18% | 3.03% | 2.78% | 2.49% | 2.51% |
| Average easy-access ISA rate | 3.29% | 3.24% | 3.02% | 2.72% | 2.69% |
| Average notice rate | 4.24% | 4.2% | 3.78% | 3.5% | 3.46% |
| Average notice ISA rate | 4.09% | 4.05% | 3.71% | 3.43% | 3.41% |
| Average one-year fixed rate bond | 5.36% | 4.24% | 4.11% | 3.98% | 3.95% |
| Average longer-term fixed rate bond* | 5.02% | 3.89% | 3.94% | 3.91% | 3.88% |
| Average one-year fixed rate ISA | 5.2% | 4.06% | 4.02% | 3.89% | 3.89% |
| Average longer-term fixed rate ISA* | 4.92% | 3.84% | 3.87% | 3.84% | 3.82% |
| *Longer-term fixed bonds or ISAs are those with terms over 550 days. Average interest rates based on a £5,000 deposit as at the start of the month. | |||||
| Source: Moneyfacts Treasury Report | |||||
It comes as rumours continue to circulate that Chancellor Rachel Reeves is considering reducing the tax-free allowance for cash ISAs from £20,000 to £10,000 or £12,000 in the upcoming Autumn Budget.
This has been routinely criticised by mortgage industry executives, who said it would increase the cost of funding for lenders and lead to more expensive mortgages.
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The Treasury Select Committee has also said lowering the tax-free allowance is unlikely to incentivise people to invest their cash in stocks and shares and that the government should focus on financial inclusion.
Cash ISAs also remain popular with consumers, with Moneyfacts figures showing that only 23% of consumers keep their savings in a stocks and shares ISA, compared to 44% in a cash ISA.
Rachel Springall, finance expert at Moneyfacts, said cash ISAs are “under threat”, as rumours persist that the £20,000 yearly allowance will be cut in a “futile attempt to push risk-averse savers to invest”.
“This year has been a milestone for cash ISAs, with the choice of deals and number of providers in this sector reaching record highs. Savers have flocked to cash ISAs to shield their money from tax, no doubt boosted by worries over a cut to the yearly allowance, with the Bank of England showing almost £30bn of deposits made since the start of April.
“However, despite the strong start to the new tax year, the choice of cash ISAs felt its biggest monthly fall since January 2024, and the average easy-access ISA and one-year fixed ISA rates are now at their lowest levels in two years,” she added.
Springall said savers “find comfort” in cash ISAs, especially those who are “being hit by fiscal drag and do not want to risk their pot in a stocks and shares ISA”.
“Indeed, investing the full £20,000 in a one-year fixed cash ISA paying 3.89% would earn £778 in interest after 12 months, which is completely shielded from tax. However, if the same amount was invested in a one-year bond at 3.95%, earning £790, higher-rate taxpayers would breach their yearly personal savings allowance (PSA) of £500, which is half that of the £1,000 limit granted to basic-rate taxpayers,” she explained.
Springall said that if the cash ISA allowance gets cut, then “not only will it cause chaos from a retail funding perspective, but it will give savers less reason to use a cash ISA in the first place”.
“Maxing out a yearly limit of £12,000 will earn less than £500 in interest based on the current average returns of a one-year cash ISA or fixed bond, currently below 4%, which is within the PSA for both a higher-rate and basic-rate taxpayer. Therefore, unless the PSA is abolished, savers who chase top rate returns would take home more interest outside of a cash ISA and there will be a greater argument for investing in a stocks and shares ISA.
“Interest rates are expected to come down further, and many economists predict another cut to the Bank of England base rate in December. However, when it comes to fixed rates, these are more in tune with swap rates, so providers will be monitoring movements very closely, while also managing their deposit funding targets. Taking time to review and switch any savings account will be essential over the coming months, as will be maximising the use of any tax-free allowances,” she noted.
Cutting cash ISA would ‘send the wrong signal to savers’, lender says
From a lender perspective, Nottingham Building Society said cutting the cash ISA allowance would “send the wrong signal to savers at a time when financial confidence is already fragile”.
Research from the building society showed that two-fifths of UK savers do not save money on a regular basis, and almost three in five said they are not saving more than they did last year.
More than a third of savers said they felt most comfortable saving into a cash ISA, rising to 47% of those aged 60 and over, showing that the product is one of the “most trusted and accessible ways to save”.
Only 18% held a stocks and shares ISA, which shows most savers are not comfortable taking on investment risk or have different needs or risk appetites.
Internal data from the mutual shows that 71% of digital fixed rate ISA customers used the full £20,000 allowance in the year to date, up from 61% last year.
Two-thirds of customers across digital and branch savers have used their whole allowance, the firm added.
Sue Hayes, Nottingham Building Society’s CEO, said: “The message to the Chancellor is simple: savers deserve choice. Cash ISAs are a trusted, straightforward way for people to save for the future – whether that’s a first home, retirement or an emergency fund. Restricting that choice risks doing real damage to financial confidence, at exactly the moment we should be encouraging people to save.
“We have been helping people save for their future for 175 years, supporting them on their journey to homeownership. That purpose hasn’t changed and neither has our belief that choice and accessibility must be at the heart of savings policy.”
She continued: “Mutuals play a unique role in the UK’s financial system. ISAs held with building societies directly support lending to aspiring homeowners, and cutting the cash ISA allowance would restrict that lending power, which runs counter to the Labour Party’s ambition to double the size of the mutual sector.
“We strongly urge the Chancellor to protect choice, protect confidence and protect the cash ISA.”
Harriet Guevara, chief savings officer at Nottingham Building Society, added that it understood the “government’s ambition to promote a stronger investment culture, but cutting the cash ISA allowance is the wrong lever to pull”.
“Cash ISAs remain one of the few straightforward, low-risk tools that help people build financial security, particularly during uncertain times,” she said.
Guevara pointed to two-thirds of its customers using the full allowance, adding that “these aren’t people with excess wealth – they’re individuals and families working hard to save for the future and making full use of the system as it was designed”.
“If the allowance is cut, one in three savers say they’d sim ply save less, and only 38% would consider switching to a stocks and shares ISA. That risks pushing people into products they don’t fully understand, or out of saving altogether. We believe in optionality and giving people the freedom to save or invest in a way that fits their goals and risk appetite.
“Ultimately, the ISA system should empower, not penalise. Stability, clarity and choice are what savers value most, and what will keep ISAs central to building financial resilience for years to come,” she said.
