Quantitative easing programme and NS&I rate cuts spark a savings rate tumble – but good deals are still out there.
Savings rates are set to fall even further following the Bank of England’s shock decision to increase its bond buying programme last week.
Many of the best easy access accounts were already scheduled to come off the savings market at the end of last week, even before the Bank’s Monetary Policy Committee attempted an economic boost with an extra £150 billion of quantitative easing (QE).
This should give high street banks access to cheaper money to lend, but takes away their incentive to offer decent returns on deposits for savers.
But experts say that QE, along with the already historically low bank rate of 0.1% going negative and rate cuts from National Savings & Investments (NS&I) this month, will put pressure on the best buy savings tables.
This is already happening.
Savings Champion says that Leeds Building Society withdrew its 0.80% easy access account at the end of last week, putting the top rate for these sorts of products at 0.75% from Gatehouse Bank and Atom.
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Last year the top rate for easy access deals was 1.5%, from Nottingham Building Society.
DF Capital also took its best buy two-year fixed rate bond paying 1.2% off the market at the end of last week, pushing Zopa to the top of the tables with a rate of 1.15%.
Anna Bowes, co-founder of Savings Champion, says: “These announcements can have an impact on savings rates.
“But an increase in QE is unlikely to have as much of an impact as an announcement that the base rate will drop to zero or into negative territory - which hasn’t happened yet.”
She warned that impending NS&I cuts have already caused best buy rates to tumble.
RacheI Springall, finance expert at comparison website Moneyfacts, agrees and urged savers to keep a close eye on the market for the best deals.
She says: “Bond issues appear to be re-priced often, particularly among the challenger banks who are quick to react to market movements and demand.
“If savers are looking for an easy access account, they may want to act quickly to take advantage of the most lucrative deals. In recent weeks we have seen several cuts and withdrawals of attractive rates, so speed is crucial.”
Springall also suggested considering current accounts for those seeking top rates.
For example, Clydesdale Bank and Yorkshire Bank offer rates of 2.02% on their current accounts and Nationwide pays 2%, though only up to £1,000 and £1,500 respectively.
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