I spoke to moneysupermarket.com’s Kevin Mountford and Louise Cuming to ask what is going on in the savings and mortgage market and to see what advice they have got for consumers in this stable interest rate environment.
Kevin Mountford: So as widely reported, the Bank of England base rate stays at 0.5%, and that was to be expected. But for most savers, that sounds like it could be worrying again, because we’ve seen savings rates nosedive over recent months. However, the facts that the banks and the building societies are desperate for our cash means that they are loading certain accounts and we really ought to take time to look at these, and to determine whether we can make an improvement.
In fact, we recently ran a campaign both in the press and also across our website, just asking people to get hold of their savings account, contact the provider, see what they’re getting and pretty much most people make an improvement on a market where the average is paying less than 1%.
And just to put that in perspective, in the easy access market you’ve got the likes of Coventry building society, Alliance & Leicester (which is part of the Santander group) paying over 3%, so that’s a huge increase on the averages that are available. And for those of you fortunate enough to be able to lock money away, you’ve actually got the Post Office paying 3.85% on a one-year bond. And if you’re lucky enough to have £25,000 and above, and are prepared to lock it away for 18 months, cahoot’s actually paying a whopping 4%.
So those sorts of rates – and there are lots of others paying over the average – it really is worth taking time out to look at your accounts, check what’s available, moving your money if needs be, and making sure that you’re getting the best return on that hard-earned cash.
Louise Cuming: Well, as expected there’s been no change to the Bank of England base rate today, and the question is what does that mean to borrowers? Well, if you’ve already got a mortgage it means that everything will stay exactly the same. However, if you’re looking for a new mortgage you might think that that means there’s no change either, and that’s far from the case.
What we’re seeing at the moment is, week-on-week, the average cost of mortgages is going up for new people looking for new deals, so I think the watchword very much is keep an eye open – if you see a good deal, jump on it because they are disappearing very quickly and don’t think just because the Bank of England rate has stayed the same, mortgage rates will stay the same, because that’s very much not the case at the moment.
CF: With the base rate expected to remain at this low level for sometime, the onus is on us consumers to take action and get the best deal on our savings and borrowing. So, if you haven’t moved you account for sometime, don’t put it off any longer.