QE Hampers the Growth of Savings Rates

The Government’s move associated with the extension of the quantitative easing programme is in fact bad news for British savers as savings rates are expected to stay low.
The latest injection of £50 billion into the country’s financial system by the bank of England came as an unpleasant surprise to savers; the cash injection implies that interest rates on mortgages and other types of loans will stay low for some more time, which in its turn means that rates on savings accounts are not expected to increase.
Yet, industry specialists warn savers from chasing after best-deals and fixing their money for a long period of time. For instance, one of the best-buy offers that is currently available on the market has been launched by Cater Allen, a private bank that is part of Santander – a Spanish lender owning Abbey. Cater Allen’s savings account pays a fixed 4% but requires a minimum deposit of £100,000. Industry professionals say that savers are to be extremely wary of such offers as the required deposit is 2 times the compensation limit.
Another market-leading offer can be found at West Bromwich, which nearly collapsed recently. However, it was saved with the help of bondholders and quickly made its way to the top of best buy savings deals by offering a striking 5.45% rate on savings.
The best tips that British savers looking for a good deal should remember are:
- Best-buy savings deals are for 5-year fixed-rate bonds only. According to Moneyfacts, in the past month, the rates have increased by approximately 0.64%, thus brining an average savings rate to 4.38%. The top rate of 5.45% is currently available from West Bromwich.
- Bonds that require you to fix for more than a year should not seem attractive to savers as they can lose out when the Bank of England will change the base rate.
- A great 1-year fixed-rate bond is offered by the Post Office. It pays as much as 3.85% on deposits starting from £500.