Has the interest rate cut affected your savings
December 31, 2007
All across the UK there were sighs of relief earlier this month, after the Bank of England announced that it would be cutting the base rate from 5.75% to 5.5% after a 0.25% cut. For many months homeowners have been struggling to keep up with mortgage repayments, with interest rates having risen five times since August 2006 and impacting heavily upon monthly mortgage repayments for many homeowners.
In addition to the recent interest rate cut many experts are predicting several further base rate cuts over the coming year, which will provide more welcome news for homeowners on variable rate mortgages as well as those due to come off cheap fixed rate mortgages. Homeowners have seen their repayments rocket over the past year and a half, and the level of repossessions in the UK has also rocketed as a result of homeowners facing severe difficulties with making mortgage repayments.
However, although the recent and forthcoming interest rate cuts spell good news for homeowners and borrowers, they do not bode so well for those with savings, as interest rates on savings accounts will also be hit by the base rate fall. Those that have no borrowing but do have savings will be particularly hard hit, as they will not have any reduction in repayments on borrowing to offset against falling interest on savings.
Savers are being urged to keep an eye on their savings account to see how the interest rate cut has affected their interest. A number of financial institutions have already announced interest rate cuts on their savings products, and this includes Egg, Halifax, Marks and Spencer Money, National Savings and Investments, and several others.
Tom Smith
31st December 2007
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