Surely saving rates must go up.....or not?

thor

Now that funding for lending for houses has stopped and as:
a) we are living in a capitalist country with banks and building societies apparently competing with each other,
b) houses, we are being told are on everyone's shopping list due to pent up demand
then perhaps we should be seeing saving rates increasing this year?

If they don't then does that mean one of my two assumptions above are false or are there other factors that need to be taken into account, i.e. banks are stuffed full of cash and still don't need saver's money?

Hominu

The scheme has 'stopped', but the banks are still full of cash and are still allowing 95% mortgages and some even cash back.

So I'd say rates will stay low this year and may even drop (First Direct are reduces rates in March from 2% to 0.75% for example).

Rates will improve when either:

Banks run low on funds,
Another housing boom occurs and they want to stop it,
Unemployment is reduced further.

I'd say we might see small increases (perhaps some 2% instant access accounts) from 2015 onwards.

Mickygg

Hominu wrote: »

The scheme has 'stopped', but the banks are still full of cash and are still allowing 95% mortgages and some even cash back.

So I'd say rates will stay low this year and may even drop (First Direct are reduces rates in March from 2% to 0.75% for example).

Rates will improve when either:

Banks run low on funds,
Another housing boom occurs and they want to stop it,
Unemployment is reduced further.

I'd say we might see small increases (perhaps some 2% instant access accounts) from 2015 onwards.

I hope I have misread. What have you heard about first direct? Which one is decreasing?

innovate

Never a truer word has been spoken: surely savings rates must go up, or not.

jimjames

At some point they will go up.

Base rate has remained at 0.5% for nearly 5 years. Seems unlikely to go up anytime soon so also unlikely savings will go up much until it does.

Lots you can do to get a decent rate though and for the average saver with small cash pots they can get between 3% and 5% on their savings which isn't too bad.

A_Flock_Of_Sheep

I thought that although FFL for houses ahs stopped it was going to be channeled into FFL for small / medium sized businesses.

Unless I heard this when I was asleep!?!?

le_loup

A_Flock_Of_Sheep wrote: »

Unless I heard this when I was asleep!?!?

That's what comes of counting sheep!

bigadaj

jimjames wrote: »

At some point they will go up.

Base rate has remained at 0.5% for nearly 5 years. Seems unlikely to go up anytime soon so also unlikely savings will go up much until it does.

Lots you can do to get a decent rate though and for the average saver with small cash pots they can get between 3% and 5% on their savings which isn't too bad.

Yes base rates have been that low for that long but there were still faintly decent savings rates available until a couple of years ago when funding for lending came in. Then rates collapsed as the government provided huge amounts of sub 1% funds.

I think rates might come up sooner as banks still comsider business lending to be risky whilst mortgage lending to be safe which is actually logical when you look at how successive governments have handled the economy in the uk.

bigadaj

A_Flock_Of_Sheep wrote: »

I thought that although FFL for houses ahs stopped it was going to be channeled into FFL for small / medium sized businesses.

Unless I heard this when I was asleep!?!?

That's correct, in theory, however after the credit crunch then banks aren't so keen on risky business lending as they see it.

talexuser

I don't think many thought rates would stay this low for 5 years when they started the 0.5% base rates. Now perhaps many don't think rates will stay low for another 5 years.... or even another 15, like Japan.

thor

According to the media, houses are going like hot cakes so the chances are that the banks/building societies are provinding the funds for this to happen via mortgages. I'm guessing at some point they will use up whatever money they had hoarded from the public coffers and start looking to raise more by competing against each other with better rates.
I consider the boe rate to be irrelevant (apart from tracker accounts) when it comes to banks rate settings as has been seen over the last decade or so. Even before ffl began, banks had been cutting and raising their rates to their own advantage(at the expense of their customers) despite the actions of the boe.
Otoh, if rates do not go up then it could be that the retail banks do not want to lend as they don't have much confidence in this latest round of house price inflation and would not want to be stuck with mortgages in negative equity OR like the utilities they don't want to get involved in a 'race to the top' price war by offering ever attractive rates and competing in the savings market, knowing to do so would mean all the banks will have to shell out more for their customer's money.
I hope I'm wrong but now that we have been conditioned in to banking at these low rates, I think the banks/b Societies will be loathe to return to their margins at pre credit crunch levels.