Halifax cuts Help to Buy ISA interest rate for new customers

Halifax, once joint-leader in the Help to Buy ISA interest rate league, has cut its rate significantly for new customers with immediate effect, relinquishing its place at the top of the table for savers for home deposits.

While existing customers will still benefit from its opening 4% interest rate, new customers will only be offered 2.5% interest per annum on their savings in the ISA. A spokesperson for Halifax explained that the move came as “we regularly review our savings range and make changes in line with the market and our competitors”.

The company representative went on to say they “have seen unprecedented demand” since the product was launched in December 2015. It is the first to reduce rates on its Help to Buy ISA.

Rachel Springall, for independent finance website Moneyfacts, reacted thus: "It's too early to tell whether this drop is a signal for other providers to follow suit, so if anyone is hesitating on taking out a Help to Buy Isa, they may want to consider doing so soon", explaining that now Santander and Penrith Building Society remain offering 4% to new customers.

Halifax is still among the top half of Help to Buy ISA providers, with Virgin Money currently offering 3% a year, Barclays 2.27% and a handful of others at the 2% mark.

Click here for more information on Help to Buy schemes.