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Follow on Google News |  The Effects of the Funding for Lending Scheme – New Report Published by Savingschampion.co.ukLloyds banking group slashes rates by up to 1.40% in the last week alone! Too early to say if FLS working for borrowers but the impact for savers is disastrous
Figures out this week on the Funding for Lending Scheme (FLS), have confirmed which providers have participated and how much they have borrowed from the Bank of England so far. Out of the £80bn that is to be made available, by the end of September the 35 participants had borrowed £4.4bn with net lending up £0.50bn – however apparently it’s still too soon to tell the real impact. We might have to wait longer to see the impact to borrowers but we’ve certainly seen the impact to new savers in the form of slashed interest rates on new issues of accounts and now a rising trend of rate reductions for existing customers. Last week was no exception. The Lloyds Banking Group decimated rates on ISA accounts offered by Halifax, BM Savings, AA and Saga - chopping as much as 1.40% from the rates for new customers. In addition BM Savings, AA and Saga also withdrew their easy access accounts without replacing them – so new savers simply have to look elsewhere. See our rates run down for more details. More worryingly some providers have announced rates cuts which affect existing savers, as well as new issues of accounts; These include FLS participants such as Bank of Scotland, Julian Hodge Bank, Manchester Building Society, Melton Mowbray Building Society, Skipton Building Society and West Brom Building Society - all have cut or announced cuts to some of their existing savings accounts. Anna Bowes, Director of http://www.savingschampion.co.uk “Savingsproviders are not just bringing down the shutters, now they’re locking the doors. The latest move by the Lloyds Banking Group members emulates Santander’s rate slashing last month. And now a flurry of providers are cutting existing customers rates and even closing accounts altogether for new savers without replacements or alternatives. These providers are clearly indicating that they are awash with cash and don’t need savers money” For the full report and any other bespoke information you require please email susan@savingschampion.co.uk or call on 0800 321 3581 and we will be happy to help. THE STATS BANK Bank of England Base Rate: 0.50% Inflation figures: CPI - 2.70%, RPI - 3.20% Rate needed to beat CPI inflation = Basic rate tax – 3.38% / Higher rate tax – 4.50% Number of accounts that match or beat inflation for a basic rate taxpayer = · Easy Access – 0 · Notice Accounts – 0 · Cash ISAs – 23 · Fixed rate bonds – 12-18 months = 0, 3 year = 1, 5 year = 2 PRODUCT OF THE WEEK Type: Fixed Rate Bond Santander – 18 Month Fixed Rate Bond Interest rate: £500+ = 2.90% gross AER £200,000+ = 3.00% gross AER Condition – Exclusive to all 123 current account and credit card customers only It’s unfortunate that the account is restricted to 123 current account and credit card customers as the rates are competitive in the current climate. It’s hard to decide whether to fix or not to fix, but with variable rate easy access and notice accounts currently paying up to 2.50% (and how long that will last remains to be seen) it’s easy to see why this latest offering from Santander may prove popular. However savers need to be aware that the top tier is only available on balances of over £200,000 so exceeds the Financial Services Compensation Scheme Limit. Rates Rundown (summary of Savingschampion.co.uk Rate Alerts over the last week) Halifax, BM Savings, The AA and Saga, all part of the Lloyds Banking Group, have reduced their Variable ISA rates for new customers. The Halifax ISA Saver Variable has reduced from 2% to 1.60% tax free/AER and the ISA Saver Online has reduced from 2.35% to 1.65%. The BM Savings ISA Extra has reduced from 2.75% to 1.35% tax free/AER, the AA Postal Access ISA has reduced from 2.70% to 1.50% tax free/AER and the Saga ISA Saver has reduced from 2.70% to 1.40% tax free/AER.) Coventry has withdrawn its market leading 60 Day Notice ISA paying 3.25% tax free/AER and replaced it with Issue 2 paying 3.10% tax free/AER. The ISA is only available for this tax year’s subscriptions and can be opened with £1. Access is on 60 days’ notice or loss of interest. Santander has launched a new 18 Month Fixed Rate Bond available exclusively to Santander 123 Current Account and Credit Card holders. The Bond is paying 2.90% gross/AER for balances up to £200,000 and 3% gross/AER for balances above £200,000. The bond can be opened with £500 in branch or by telephone. ENDS About SavingsChampion.co.uk: Serving savers in three simple ways: 1 - Best Buy Tables (http://www.savingschampion.co.uk/ 2 - Rate Tracker (http://www.savingschampion.co.uk/ 3 - Rate Tracker Concierge (http://www.savingschampion.co.uk/ SavingsChampion.co.uk is dedicated to savers and savings accounts with the aim of producing a straight talking and simple to use site that is totally independent, completely unbiased and whole of the market. SavingsChampion.co.uk monitors the whole UK savings market of over 4,000 savings accounts and 9,000 savings interest rates daily and via the unique free Rate Tracker service monitors movements in all registered users’ savings accounts. SavingsChampion.co.uk is available for expert comment on a range of savings queries so please feel free to call. SavingsChampion.co.uk is happy to help where possible and holds a variety of statistics on all types of savings accounts so can run reports on request. If you publish content about savings accounts and would like to be included on the immediate list for press releases please email info@savingschampion.co.uk SavingsChampion.co.uk provides a free Rate Alert service, which helps savers to keep up with the release of new savings products and interest rate changes as they happen in the whole market. SavingsChampion.co.uk provides a fully managed savings portfolio service, Rate Tracker Concierge for a small fee for savers with £100,000+ For more information: Anna Bowes: 0800 3213581 / 07887 481149 anna@savingschampion.co.uk Susan Hannums: 0800 3213581 / 07887 998 984 susan@savingschampion.co.uk End
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