Britons are making the most of the recent credit crunch by switching more than £57 billion worth of savings in a bid to make the most of strong rates caused by the recent global financial market conditions, according to research by Abbey Savings.
For every pound UK consumers saved during the second quarter of 2007, they only borrowed eight pence – which is a marked drop from the 32 pence borrowed against every pound in the previous quarter. And savings figures are also up – by a respectable £10bn on the same period last year.
In addition, unbiased.co.uk has announced their latest Savings Brake figures and found that UK consumers are taking advantage of recent interest rate rises with savings levels for the second quarter of 2007 topping a record £47 billion.
UK consumers took out almost £4bn worth of secured and unsecured debt during the months of May to June in 2007, nearly £13bn less than in the same quarter of 2006. David Elms, Chief Executive of Unbiased.co.uk, explains:
“It is extremely encouraging to see that savvy consumers are taking advantage of the recent rate hikes with previously unseen record levels of savings now taking place! Plus it’s even better that Britons appear to have tightened their belts and are approaching borrowing far more cautiously than in previous months.
“Last quarter saw the Savings Brake ratio worryingly move back up above the 40 pence mark – a consequence of paying off Christmas debt - so it’s with relief that we see it fall by a staggering 24 pence in Q2. However we shouldn’t take these figures for granted - it’s important to note that personal debt in the UK continues to rise and, as such, UK consumers should continue to be savvy when it comes to saving and spending their money.”
While the market movements have produced some of the most attractive savings rates relative to base rates, there are indications that they have a limited shelf life following a significant dip in LIBOR rates over the past week.
Reza Attar-Zadeh, Director of Savings and Investments at Abbey adds: “This is a great time for savings and we are seeing interest from new savers at unprecedented levels. We would urge savers to take advantage of these excellent rates while they last.”
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