Lower base rates causing savings headaches

Posted: 02 Apr 2009 13:03:41 GMT

The Bank of England's decision to reduce base rates to just one per cent means that savers could now struggle to purchase a house, it has been claimed by financial website Moneyfacts.co.uk.

With almost nine in ten (89 per cent) accounts in the UK now paying less than two per cent interest on deposits saving for a mortgage is becoming harder than ever.

As such, many potential homeowners will have to rethink the properties they were hoping to save for, by aiming for a cheaper home with a lower deposit.

Michelle Slade, analyst at Moneyfacts.co.uk, which conducted research into the interest paid on savings, said: "Just 11 per cent of accounts on the market pay a rate of over two per cent, so it is imperative that savers review what rate they are currently receiving.

"Many people are predicting that bank base rate has gone as low as it can and savers will be hoping that rates now start to improve."

Although 72 per cent of savings providers announced rate cuts following the Bank of England's recent cuts, just 29 per cent of lenders confirmed that they would be cutting the cost of their mortgages.



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