Long-term interest rates at nine-year low
According to the Telegraph, savers were the “forgotten victims” of the credit crisis as the Bank of England said the average interest paid on time deposits and savings accounts – such as one year bonds – had fallen from 2.06% to 1.85% in the past month.
It added this was the first time the figure recorded by the Bank had dropped below 2% since current records began in 2004.
The report said industry commentators blamed the government’s Funding for Lending scheme, which is designed to flood banks and building societies with cheap money, in the hope its passed on to small businesses.
It added while lending is slowing increasing, analysts said banks and building societies do not have to offer attractive rates on deposits.
Andrew Hagger, personal finance expert at MoneyComms told the Telegraph: “In the past year the interest on one year bonds has fallen by 41%. Ever since Funding for Lending came in the interest rates on savings products has dropped as banks don’t need customer deposits as much as they used to.”