7% available on some savings accounts
May 22, 2008
There is good news for savers in the UK, with recent reports showing that interest rates on some savings accounts are the highest in six years, reflecting the brighter side of the recent series of interest rate rises that have taken place over the past year. Five interest rate rises of 0.25% each have resulted in the base rate rising from 4.5% last August to 5.75%, which has created problems for borrowers on variable interest rates. However, for savers the interest rate rises have resulted in better returns on their savings.
A number of 7% interest rates on savings accounts have come onto the market recently, enabling consumers to enjoy excellent returns on their savings. This is despite the recent turmoil in the financial markets, where borrowers have suffered difficulties and inter-bank lending charges have rocketed. Despite this reports show that around twenty banks have raised interest rates on at least one of their savings accounts over the past few weeks.
One industry official 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.” The Stroud and Swindon Building Society has introduced a 7.05% interest one year savings bond. The Standard Life has also introduced a 7% interest rate savings account for a six month period.
Figures show that there are seven times as many savers as there are mortgage borrowers, and as one industry professional pointed out encouraging savers by offering increased interest rates is an effective way for many lenders to fund their mortgage lending.
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