Savers have been stashing away record amounts in cash individual savings accounts (ISAs) amid market turmoil, Hargreaves Lansdown has said.
Figures from the investment platform showed record flows into Cash ISAs in the first 20 days of April as turbulence gripped the stock market thanks to US President Donald Trump’s trade wars.
Mark Hicks, head of active savings at Hargreaves Lansdown, said its Cash ISA offerings were ‘booming’.
Fierce competition has meant savings rates have remained high despite the recent turbulence pushing so-called ‘swap’ rates on financial markets lower, he added.
And Hicks said demand had also been boosted by speculation that Labour is preparing to hike taxes to balance the books as the public finance picture
worsens. That is likely to have encouraged savers to maximise their use of their tax-free ISA allowances.
Fresh figures show record flows into cash ISAs in the first 20 days of April as turbulence gripped the stock market thanks to Donald Trump’s trade wars
Interest has also been boosted by ‘rumours around the reductions in the Cash ISA allowances in the future’, he said.
Savers can put away up to £20,000 a year in ISAs, either in stocks and share products or in cash, or a combination.
But some City figures have called for the allowance for tax-free cash savings to be reduced in order to boost the stock
market – a plot that is opposed by building societies, which rely on Cash ISAs to fund mortgage lending.
Meanwhile, speculation is growing that central banks including the Bank of England will speed up the pace of interest rate cuts amid growing fears of a downturn.
Bets on faster rate cuts mean lower swap rates – financial market products used by lenders to price their savings and mortgage products.
But Hicks said that competition from new banks and specialist savings apps ‘meant banks and building societies have had to cope with a significant increase in competition this tax-year end, which has meant it has been harder to hit their funding target – part of the reason why savings rates have stayed elevated’.
Separately, online trading platform Plus 500 said it had been boosted by the market turbulence, with revenues up 13 per cent in the first quarter.
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