Credit crisis benefits savers with savings account rate war

16 June 2008 / by Rachael Stiles
While mortgage customers and other borrowers struggle to make ends meet as the credit crisis pushes up interest rates, savers are benefiting from a fixed rate savings war.

Savers are one of the only groups to benefit from the credit crisis, while many homeowners are finding that they can no longer afford their mortgage payments when they come to the end of fixed rate deals and their payments shoot up by hundreds of pounds.

Savers are reaping the rewards as banks and other lenders attempt to increase their savings deposits and reduce their lending in order to shelter themselves from a freeze in liquidity.

Subsequently, a fixed rate war on savings accounts has broken out as providers compete for customers.

"With rates on fixed rate bonds continuing to increase, for the first time in many years we have seen all of the top six Moneyfacts.co.uk best buy places being taken up by rates of over 7%." said Rachel Thrussell, head of savings at Moneyfacts.co.uk.

As of yesterday, First Save, West Bromwich Building Society, Icesave, Bradford & Bingley, and Yorkshire Building Society are all offering rates of seven per cent or more on fixed rate savings accounts or bonds.

Miss Thrussell continued: "Fixed rate investments are not suitable for everyone, but for anyone who doesn't need access to their money for a period of between six months and five years, then rates as high as 7.10 per cent can be found.

"With the banks and building societies struggling to raise money on the money markets, tempting savers has become increasingly important. With fixed rate investments, the institutions can guarantee that they will have your money for a set period of time, which they can then use for lending on mortgages or personal loans.

"With the credit crunch showing now signs of abating, who knows just how high these rates could go?"

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