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Savers might have to be willing to tie their money into long term
deals in order to enjoy reasonable returns on their investments.
The
latest figures from the Bank of England have revealed that instant
access accounts are still suffering from low interest rates
following the fall in the basic rate to 0.5 per cent.
According
to the Bank, the average interest rate on instant access accounts
was 0.15 per cent last month, down slightly on the March figure. In
April 2008, the average rate of return was 2.42 per cent.
Average
interest rates on tax-free Individual Savings Accounts (ISAs)
slipped to 0.41 per cent in April compared with 0.63 per cent in the
previous month. A year ago, ISAs were delivering an average rate of
4.81 per cent.
However,
rates appear to be improving on longer term savings accounts.
Rachel
Thrussell of Moneyfacts, the financial comparison service, said
that, in recent weeks, interest rates on a number of four or
five-year fixed-rate bonds had moved above 4 per cent.
At
the beginning of April, only a couple of fixed-rate savings accounts
paid out more than 4 per cent. Now more than 40 are doing so.
One
reason for the sudden increase in high value fixed-rate accounts
could be that banks and building societies are readying themselves
for a return to the mortgage market and want to raise more capital
to back the extra lending.
Andrew
Haggar of Moneynet.co.uk said that fixed-rate accounts could become
more competitive still as lenders start to offer a broader range of
mortgage products again. |
