The strongest ISA season for nine years

A total of £956m was paid into UK-based unit trusts and OEICs (open-ended investment companies) between March 1 and April 5, the highest level for the period since 2002, according to the Investment Management Association.

Around £349m was paid into Isa versions of funds between April 1 and 5, as investors rushed to use up their tax-free savings allowance before the start of the new tax year, more than double the £152m that was paid in during the same period of the previous year.

But despite the last-minute rush, total Isa sales for the whole of 2010/2011 were marginally down on the previous year at £3.68bn, compared with £3.99bn.

The performance of the past two years marks a significant turnaround for the sector, which saw more money taken out of Isas than was paid into them for four consecutive years between 2004/05 and 2008/09.

Jane Lowe, director of markets at the Investment Management Association, said: “The last two tax years have together seen a big jump in Isa inflows to more than £7.5bn. This coincides with two increases to the annual allowance in October 2009 and April 2010 and compares starkly to Isa outflows of over £5bn over the preceding five years.”

A total of £1.9bn was paid into all types of unit trusts and OEICs, not just Isa versions of the funds, during March, in line with the recent 12-month average.

The total value of funds under management, including money held for institutional investors, rose by 1 per cent during the month to £583.2bn.

n Interest rates on small personal loans hit a record high during April as unsecured borrowing costs remained elevated.

The typical interest rate charged to people borrowing £5,000 jumped by a massive 2.2 per cent during the month to stand at 15.58 per cent, the biggest monthly change ever recorded and the highest rate since the Bank of England first began collecting the data in 2005.

Credit card rates also increased, rising to 16.73 per cent, up from 16.66 per cent, to stand at their second highest level since early 2002 while, at 19.08 per cent, overdraft rates were only fractionally down on the record high of 19.1 per cent they reached in December.

Financial information group Moneyfacts.co.uk attributed the steep rise in lower-value loan rates to the fact that lenders were focusing on the market for larger advances.