The average interest rate for a cash Individual Savings Account (ISA) fell to 1.43% in August, which is the lowest rate since comparable records began in 2011, according to the Bank of England.
Saver returns from notice accounts, which include ISAs, are also at their lowest level since records began, back in 1999.
With the Bank of England having held its interest rate at 0.5% since March 2009, returns for savers have inevitably been low. However, banks and building societies have continued to cut their savings account rates in recent years.
From 16 November the popular government-backed National Savings and Investments (NS&I) ISA will have its rate cut from 1.5% to 1.25% – a move that will affect some 400,000 savers and apply to approximately £3.8bn of savings.
Jane Platt, chief executive of NS&I, said: ‘Interest rates in the easy access ISA market have been in decline over the year, and our Direct Isa rate has stood out at the top of the best-buy tables for some time.
‘To ensure that we continue to strike a balance between the needs of our savers, taxpayers and the stability of the broader financial services sector, we have taken the difficult decision to reduce the rate on our Direct Isa.’
With little immediate prospect of a Bank interest rate rise, savers are likely to see low returns on ISAs for the foreseeable future – though for many, this will be balanced by continuing low mortgage rates.