Savings account may exceed 7%
October 16, 2007
According to recent reports some savers can now benefit from interest rates that exceed 7%, which is the highest savings account interest rate that has been available in six years.
Although interest rate rises, the recent turmoil in the financial markets, and increased inter-bank lending rates have all had a negative impact for borrowers, savers have been able to enjoy the upside of this situation with some now able to enjoy interest rates in excess of 7%.
A one year investment bond has been launched by the Stroud and Swindon Building Society, offering 7.05% interest. Another deal offering 7% interest has been launched by Standard Life for a six month period. Reports also show that around twenty banks and financial institutions have raised at least one of their interest rates for savers over the past couple of weeks, showing the positive side of the current financial situation in the UK.
With around seven times as many savers as there are mortgage borrowers, many people may benefit from this impressive rise in interest rates, state experts. One industry official stated that financial institutions can help their mortgage funding through encouraging a higher level of deposits by offering increased interest rates. She stated: “Lenders are looking for alternative ways to fund their mortgage lending, and it seems as if increasing deposits has been the first port of call for many. A return of 7% is quite outstanding.”
Unfortunately, the news is not as good for borrowers, who have had to cope with increasing difficulties in getting finance, and increased borrowing costs.
The Bank of England governor recently stated: “These changes are likely to have consequences for the wider economy through the interest rates for borrowing and lending faced by households and companies.”
Alan Wright
16th October 2007
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