Savers are paying for low mortgage rates
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The focus on reducing mortgage rates is forcing providers to cut their savings rates to balance the books, says Moneyfacts.co.uk.
Savers are receiving 23.3% less interest from a fixed-rate bond than they would have nine months ago.
Yet 29% of savers are looking to fix their interest rate, with the average amount invested in a fixed rate bond standing at £36,872.
Savers investing the average amount nine months ago would have received £1,209 in interest, compared to just £978 today.
Michelle Slade, spokesperson for Moneyfacts.co.uk, says savers were left “bitterly disappointed” by last week’s Budget.
She adds: “Uncertainty over when bank base rate will rise means most savers are only taking a short term view, but they are being punished by the biggest reductions in rates.
“At 2.62%, the average rate on a one year bond stands at an all time low. Prudent savers who rely on the interest from their savings to supplement their income continue to be hit the hardest.
“With a change in bank base rate still predicted to be a little way off, the situation for savers is likely to get worse before it
gets better.”
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Readers' comments (2)
Tim Hague | 5 Jul 2010 1:47 pm
The truth is that lender's margins have improved lately as they concentrate on quality and profitability rather than volume of lending. That means they could, if they chose, to pay savers higher rates. The decline on fixed rate savings returns has nothing to do with lenders paying lower mortgage rates and all to do with the continuing fall in swap rates over the period... It remains a tough time for savers but it's not right to blame lower mortgage rates.
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Anonymous | 6 Jul 2010 8:41 am
Ssssh...don't tell everybody!
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