UK Price Comparison website Which4U - Compare Credit Cards, Savings Accounts, Fixed Rate Bonds, Bank Accounts, Individual Savings Accounts, Loans, Mortgages, Insurance, TV & Broadband and Gas/Electric bills to find the best UK deals
Savers are beginning to enjoy better rewards again after banks and building societies continue to offer more competitive deals in order to raise money to fund new mortgages and clear previous wholesale borrowing before the financial crisis.
Figures from the financial information firm Moneyfacts have shown that interest rates paid on fixed rate bonds have seen more than a 50% increase since March, despite the Bank of England base rate remaining unchanged at its lowest ever recorded level of 0.5%.
Since March, the average rate paid on 5 year fixed rate bonds has increased from 2.86% to 4.38%, while 4 year bonds have seen a rise from an average of 2.89% to 4.12%.
The last few weeks have brought a number of new fixed rate bonds offering rates of up to ten times higher than the current base rate, some of which are being offered through small and medium-sized building societies.
Barnsley building society is currently offering 5% on its 3 year fixed rate bond available online. Instant access savings accounts are also upping the competition, with Egg increasing its rates to a market-leading 3.25%.
Michelle Slade, spokeswoman for Moneyfacts, said lenders had progressively turned to the retail market in order to raise funds.
"Continuing volatility in the money markets is seeing providers increasingly having to use their savings books towards funding their lending activities. Most fixed rates investments don't allow early access, as this guarantees the length of time the funds are available to the provider," she said.
Ray Boulger, from mortgage broker John Charcol, said there were several reasons behind smaller lenders looking towards retail deposits in order to fund new mortgages. This year, a number of small to medium size lenders have had their ratings downgraded by credit rating agencies, making it harder for them to get credit, not to mention more expensive.
"Some of the banks and building societies will also have wholesale funds coming up to maturity that they raised in the good times and now need to repay and retail funds will be the cheapest way for them to get the money in," he said.
These pressures have resulted in an influx of competition into the savings market, Boulger added. "There was a limit over which it wasn't worth paying for extra funds when lenders could raise money easily on the wholesale markets," he said.
- Related Videos
- Related Articles
- Ask / Related Q&A
- Fixed rate bond rates increase to fund mortgage deals
- Savers turning from ISAs to Fixed Rate Bonds
- Fixed rate bonds provide potential to earn 10x base rate
- Fixed rate bonds and saving market 'recovering from recession'
- Competitive accounts and credit cards 'can make the most of money'
- American Express introduces dormant fee for unused credit cards
- Getting to grips with balance transfer credit cards
- Credit Cards trends alter amid financial crisis
First Time Home Buyer Credit - Qualifying Criteria and Restrictions
By: Safiur Rahman | 28/11/2009If you are wondering whether you qualify for the first time home buyer credit you may want to read through this article. Although the basic qualifying criteria may be simple, there are twists and caveats in the law that may result in you being found ineligible. Similarly, you may qualify for the credit if certain conditions apply to you even though you normally would not.
Have You Been Trying To Get A Canada Mortgage?
By: Rudy Silva | 28/11/2009Do you plan to apply for a Canada mortgage? Do you know the basic qualifications? First, you must have a regular income. Lenders look at your monthly expenses. If you are employed, get your tax and financial documents. Learn more about a Canada Mortgage in this article. Discover mortgage information that will help you get a Canada loan.
Will I Save Money Without a Mortgage Broker?
By: David Nalin | 28/11/2009The simple answer is neither yes or no but “maybe!” Perhaps you might be capable of doing the necessary loan searches if you have the same qualities and qualifications a professional mortgage broker possesses.
Why Should I Use a Mortgage Broker?
By: David Nalin | 28/11/2009Unfortunately for many mortgage seekers, they really do not understand how to use a mortgage broker to their best advantage. Many who are new to the lending and borrowing process believe it is not necessary to use a mortgage broker. They think it is one of those suspicious type occupations with activities that easily can be performed by a well-informed and self-educated potential borrower. Good luck with that line of thought.
Your Best Mortgage Has Many Features to Consider
By: David Nalin | 28/11/2009The best mortgage suiting your personal needs will have features that make the deal an attractive one. There are several separate features available if looking to reduce loan interest or seeking a discounted interest rate. You may look for a loan to combine all your accounts into one or seek making additional repayments to clear your home loan quickly. You can also link a savings account to your best mortgage choice.
Best Mortgage Choice is Based on Personal Needs
By: David Nalin | 28/11/2009The best mortgage available in today’s Australian home-buying market depends upon a potential borrower’s personal financial situation. There are, literally, hundreds of mortgage products on the market and a smart consumer will seek out the best mortgage advice from a trained home loan consultant.
Mortgage Refinance Scams and Predatory Lenders
By: MPetrone | 28/11/2009Foreclosures are currently at an all time high, home values are rapidly declining, and the housing market is unstable at best. These times have created stressful, and huge financial problems for homeowners all across the country. Unfortunately, some homeowners are being taken advantage of, and it could cost them their home, a lot of money, or both. Here are some of the most popular scams a homeowner may be lured into when facing foreclosure or mortgage modification.
FHA mortgage, FHA Loan down to 530 FICO
By: FHA home loan Lender | 27/11/2009Before you start the FHA home loan process, be prepared to provide some information to your FHA loan officer. Have it ready now to save time later.
Get 5% cashback on your Christmas spend with Amex
By: Sam Gooch | 26/11/2009 | Personal FinanceSmall businesses are being urged to seek out a bank that will meet their requirements and offer the support they need.
Consumers 'need to get on to a firm financial footing'
By: Sam Gooch | 26/11/2009 | Personal FinanceOne writer points out that it is crucial people take steps to prepare their finances for the future.
Beware of sophisticated credit card scams, consumers advised
By: Sam Gooch | 26/11/2009 | CreditAs scammers use increasingly sophisticated ways of targeting people, Aussies are urged to take preventative measures in protecting their finances.
Lloyds reveals plans to issue new shares
By: Sam Gooch | 26/11/2009 | InvestingLloyds Banking Group has announced plans to sell shares at 37p in the biggest rights issue seen in the UK.
Lloyds reveals plans to issue new shares
By: Sam Gooch | 26/11/2009 | InvestingLloyds Banking Group has announced plans to sell shares at 37p in the biggest rights issue seen in the UK.
Banks fees 'constant cause of angst'
By: Sam Gooch | 26/11/2009 | BankingThe removal of several bank account and credit card fees has helped to improve the National Australia Bank's reputation, it has been suggested.
Banks win overdraft charges case
By: Sam Gooch | 26/11/2009 | BankingMillions of consumers hoping to claim back 'unfair' bank charges have been dealt a major blow by a Supreme Court ruling.
Young people 'popular target for credit card fraudsters'
By: Sam Gooch | 11/11/2009 | Personal FinanceIt is crucial that people take steps to prevent their financial information from being compromised by identity thieves, it has been reported.