Savings deals vanish as rates are held

This month’s decision by the Bank of England to keep interest rates on hold again has been somewhat overshadowed by the Pre-Budget Report...

The base rate has been at 0.5% since March and it’s unlikely to change any time soon with some economists thinking it could even be 2011 before we see rates start to rise.

In his Pre-Budget speech, the Chancellor, Alistair Darling, said he expected inflation to go up from 1.5% to 3.0% next year something which ordinarily might prompt interest rates increases. However, he also added that he expected inflation to fall back again. Which supports the view that base rate is unlikely to change for the foreseeable future.

This is obviously good news for those with mortgages, anyone with a variable rate won’t see their payments change anytime soon and there are even signs that things are getting better for those looking for a new mortgage, we have seen a number of lenders launch new, lower rate deals recently.

However, the picture is a bit different in the savings market. Over the last few days we have seen a lot of products being pulled from the market. But more to do with the time of year rather than the market becoming less competitive. Expect providers to come back with a vengeance in the new year and launch new higher rate deals, because banks and building societies are still desperate for retail deposits from the likes of you and I.

In the meantime if you are looking for a savings account now, its not all bad news - the leading easy access deals are paying 3.0% or more, and if you have got money you can afford to lock away for 5 years or so you can still get 5.0% or more, so its not total doom and gloom.

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