Wednesday, November 13, 2019
No menu items!

Decade Of Rock Bottom Rates Leave Savers In The Red

Must Read

Melting Ice Cap Could Raise Oceans 11 Feet Within A Century

As 11,000 scientists from around the world unite to declare a global climate emergency, a terrifying warning from the...

Internet Music Service Out Of Tune With Copyright Law

The internet dilemma of who owns the rights to content has just taken a new twist with a ruling...

And The Word Of The Year For 2019 Is…

English is changing all the time as new words fall in and out of fashion, and the latest in...

Savers with cash in the bank have seen their nest-egg ravaged by inflation and interest rates over the past 10 years.

Anyone with money stashed in a bank is in the red, according to a new study.

Financial wizards at online financial platform Hargreaves Lansdown have calculated that £1,000 saved in 2007 is now worth just £878 in spending power.

Had they invested the same amount in the stock market, the return over the decade would have been £1,323 after adjustment for inflation and a 50% fall in the FTSE after the financial crash.

The company says £180 billion is languishing in bank accounts paying meagre interest rates that are less than inflation, which is running at around 2.5%.

Inflation since 2007 has added up to 26%.

Borrowers are real winners

The real winners are borrowers, who have seen interest rates on mortgages and personal loans plunge over the same period.

At the start of the decade, home loan rates averaged 5.8% but fell by more than half to around 2.6% now. Homeowners hold around 7 million mortgages.

Over the period, personal debt has risen from £191 billion to £199 billion.

Laith Khalaf, the firm’s senior analyst, said: “While cash savers have undoubtedly felt the pinch from lower interest rates, there have been benefits for borrowers which have helped support the economy.

“Unsecured consumer borrowing rates have fallen too. The result was much lower levels of consumer loan defaults.

No respite for savers

“UK lenders have written off £2.5 billion of bad consumer loans over the last year. This compares to £6.8 billion in 2007.

“The good news is household income has also risen over this period, which along with low interest rates make this debt more affordable.”

According to financial monitor Moneyfacts, the best interest rates on cash savings are 1.11% on easy access accounts with the Bank of Cyprus, Tesco Bank and the Post Office. The minimum investment is just £1.

Fixed rates over five to seven years are between 2.42% and 2.55%, but tie up as much as £25,000 for the term.

The Bank of England base rate is 0.25% and is expected to hold at this level for some time due to fears over how Brexit may impact the economy between now and March 2019.
>

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest News

Melting Ice Cap Could Raise Oceans 11 Feet Within A Century

As 11,000 scientists from around the world unite to declare a global climate emergency, a terrifying warning from the...

Internet Music Service Out Of Tune With Copyright Law

The internet dilemma of who owns the rights to content has just taken a new twist with a ruling by the High Court in...

And The Word Of The Year For 2019 Is…

English is changing all the time as new words fall in and out of fashion, and the latest in vogue phrase is ‘climate strike’,...

Wildfires – How Science Is Helping To Dampen The Flames

Wild fires raging in some corner of the world seem to be hot off the press and in the news a lot. Huge fires have...

ISIS Dictator Al-Baghdadi Dies A Brutal Death

Islamic State leader Abu Bakr al-Baghdadi blew himself up rather than be captured by US special forces as he was chased down by military dogs...

More Articles Like This