Tembo lowering my LISA rate to 3.55%

Oasis1

Just had an e-mail saying my rate is going down from 3.8% to 3.55% - really disappointing given that interest rates are generally holding or going up.

I remember being warned about becoming beholden to a bank because of a lack of competition with LISAs. I hope the new help to buy ISA is simple enough that most banks offer it so competition is better and I can transfer across for a better interest rate. Quite a lot sitting in there now.

MeteredOut

https://forums.moneysavingexpert.com/discussion/6679107/tembo-lowering-my-lisa-rate-to-3-55

You'd have been aware at the time of opening the LISA that the interest rate is varaible. And you're not really beholden to them. Why not transfer it elsewhere to another LISA?

eskbanker

https://forums.moneysavingexpert.com/discussion/6679107/tembo-lowering-my-lisa-rate-to-3-55

The document outlining the new first time buyer ISA clarifies that transfers in from LISAs won't be permitted, as it's money that's already had the bonus added.

clairec666

https://forums.moneysavingexpert.com/discussion/comment/82095524#Comment_82095524

The trouble is, there's not much competition, you haven't got lots of providers trying to offer the best rate to attract savers. LISAs feel a bit like having the restrictions of a fixed-rate ISA with none of the benefits.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82095602#Comment_82095602

But that's nothing new - to the best of my recollection, the LISA market hasn't ever been particularly competitive, which would have been visible to anyone opening one for the first time and then when continuing to monitor rates thereafter…

clairec666

https://forums.moneysavingexpert.com/discussion/comment/82095619#Comment_82095619

True but still doesn't make it great for savers. And with the introduction of some kind of replacement product, I imagine there'll be even less choice - nobody could have predicted that when opening a LISA.

I'm switching mine to S&S as I'll no longer be using it for a house deposit, so it'll be in there for the long term.

masonic

https://forums.moneysavingexpert.com/discussion/comment/82095653#Comment_82095653

That's an option anyone can take to be honest. Take AJ Bell for example, you can pay a fee capped at £42 per year on their main platform and hold individual gilts, or a money market ETF, which will deliver competitive interest. For smaller accounts their Dodl platform charges 0.15% and provides a MMF option.

I'm in the same boat as you, not having used mine as a FTB, but had mine invested in risk assets from the start, showing how confident I was about buying 10 years ago - turns out I wasn't far wrong.

SFCooper

Not even completed my switch to Tembo and hit with this news.

Not impressed.

Deru

I've only had Tembo for a few months after transferring from Moneybox so I'm not impressed either. I'm aware it's variable but when the base rate hasn't changed and it still goes down for no reason then I'm guessing they just want to pay you less.

Oasis1

Exactly @Deru, it feels like they're doing it because they can - you can't easily switch because so few are available. Until Moneybox allows people who've had a LISA with them before to open a new one, I'm stuck!

dcs34

I mean I only moved to them because they offered a better rate than others. So kind of to be expected that at some point they'd need to dip down below the top end of the rate table, since their LISA accounts are likely pure loss-leaders to provide a customer pool for their mortgage products.

Of course, when I opened my LISA, I didn't predict the government would (1) never uprate the property cap (2) allow penalty-free withdrawals during the pandemic which probably reduced a large number of LISA-holders, and (3) announced they were introducing a new product which effectively scraps the LISA as a going concern for improvements, leaving existing customers locked-in to a product whose restrictions haven't kept pace with the property market.