Saver disadvantaged by lower interest rates

In general, savings rates are now lower compared with last year

It’s an unfortunate fact that any interest rate cuts, although welcome news for borrowers and the business community, are the curse of savers, many of whom have been disadvantaged by higher rates of inflation.

In general, savings rates are now lower compared with the higher rates that were available last year, when many of the banks were offering more attractive rates because they had become increasingly reliant on deposits from consumers to fund their mortgage lending. The only comfort to savers is that many banks still need depositors’ money and therefore may not pass on any future rate cuts.

During much of 2008, returns on savings accounts were at seven-year highs as lenders became increasingly reliant on consumer deposits to fund their mortgage book. But with lower interest rates, many of the savings rates have become short-lived.

Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investment can go down as well as up and you may not get back the full amount invested.