Page last updated at 11:45 GMT, Thursday, 17 December 2009

Savers suffered a dismal year, says Moneyfacts

Money
Finances have been squeezed during the recession

UK savers had an increasing number of savings products to choose from in 2009 but interest rates were at record lows, figures from Moneyfacts have shown.

An extra 220 savings products are on the market compared with the start of the year, but the majority have seen rates drop by more than 0.5%.

The financial information service said that only those willing to lock money away in fixed-rate products benefited.

The year proved to be a mixed bag for mortgage borrowers, it said.

'Lifestyle change'

A conservative approach by financial institutions in the downturn has led to demand for savers' money over a long period.

As unemployment continues to rise, the risk of customers defaulting on [unsecured lending] payments increases and this increased risk is being reflected in higher rates
Michelle Slade, Moneyfacts

As a result, the typical interest rate for a three-year bond has risen by 0.64% over the year to 4.1%. For a five-year bond, the average interest rate has risen by 1.3% to 4.63%.

However, typical rates for one-year bonds, Individual Savings Accounts (Isas), notice and easy access accounts have all fallen.

"Those that rely on the income from their savings to supplement their income, such as pensioners, have been the hardest hit, with many having to make changes to their lifestyles as a result," said Michelle Slade, of Moneyfacts.

Credit deals

The low-risk approach by lenders resulted in the interest charges on unsecured loans - such as credit cards and personal loans - rising by 0.4% over the year.

"Unlike on secured lending, lenders have no guarantee of getting their money back. As unemployment continues to rise, the risk of customers defaulting on payments increases and this increased risk is being reflected in higher rates," said Mrs Slade.

"Card companies are continuing to offer competitive introductory deals, but appear to be severely limiting who they will accept for such deals."

People who have a tracker mortgage or who are on their lender's standard variable rate have benefited from low interest rates on home loans.

Many have ploughed this money back into paying off the mortgage.

However, some of those looking for a new fixed-rate deal have seen the cost rise steadily over the year, Moneyfacts said.



Print Sponsor


RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites



FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC navigation

BBC © 2013 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific