MSE News: All Halifax Help to Buy ISA customers to be hit with rate reductions

Why has Halifax cut the interest rate again?

We are awaiting an explanation from Halifax and will update this story when we hear back from the bank. When Halifax rolled out its previous rate reduction, a spokesperson told us the bank had arrived at the decision to "align with the rest of the market".

I'd be surprised if you get a better explanation than "market forces", as that's a reasonable explanation for any time a variable rate changes.

They seem to be doing what they can to preserve rates for the existing customers so as not to be accused of "bait and switch":

- People signing up for the account before the last reduction in May when the market leading rate of 4% was still being offered, will still be getting a market leading rate of 3.5%, despite the BoE base rate halving since then;

- People signing up after May but before late August will see their rate drop by the same 0.25% as the most recent bank base rate drop, as they go from 2.5% to 2.25%

- People who had signed up in the last few weeks (since late August) were already at 2% and will not get a reduction (even though the MSE article says in one place that those customers were on 2.5%, I think that might be MSE's mistake).

At the end of the day, it's a variable rate account. The real bonus of using a help to buy ISA product is the fact that you can put a bit of money into it and within three months you can qualify to get a government payout of 25% free money. 25% (not compounding) every three months is doubling your money every year, nice work if you can get it.