Robbing borrowers to keep savers

Article Abstract:

United Kingdom mortgage lenders are not reducing their rates for borrowers by as much as interest rates are being reduced by the Bank of England. Mortgage lenders also have savers, but their mortgage assets are larger than their savings balances. Retail savings are still important for mortgage lenders, who have to bear savers in mind when setting rates for borrowers. Savers may show little interest in short-term building society despot accounts if interest rates drop much further, and they may turn to life companies. Securitization is another trend that could take off.

Mortgage bankers and correspondents, Mortgage Bankers, Real Estate Credit, Mortgage banks

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Not so safe as well as sorry

Article Abstract:

Savers using UK building societies may find they are losing money since real rates of interest after tax are sometimes negative. Savers could benefit from a drop in inflation, but this is not certain since inflation may rise over the medium term. Savers should avoid using certain types of account such as instant access from branch offices of building societies. They could also consider using other types of investment vehicle which may provide better returns though also involve more risk.

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Savings rates start to slide

Article Abstract:

UK savings and loan associations are reducing their rates for savers who are helping to fund reductions in mortgage rates. Five of the biggest UK companies have cut their rates, as well as many smaller companies. Rates are also dropping for bonds. Investors may consider moving to fixed-interest products, but they should consider the likely movement of UK interest rate policy. The pressures are not yet strong enough in Sep 1995 for fixed rate investments.

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