Savers were hoping that the interest rate would not be cut again – as experts say it won?t be much help and will actually be more harmful then helpful – but the Bank of England still cut the rate from 1 per cent to 0.5 per cent.
uSwitch have revealed that providers have cut rates on savings accounts by around 0.5 per cent, which brings the average rate down to 1.08 per cent. For some banks, there isn?t an option as banks like Newcastle Building Society and Ulster Bank are offering rates at 0.01 per cent, which gives the saver a return of just 28p.
The cutting of rates was suppose to be a way of helping the mortgage market, but as rates are cut, many are becoming more sceptical for the reason of doing so.
The Building Societies Association (BSA) says that doing so is bound to be “bad news for almost everyone connected to the savings and mortgage markets”.
The BSA is trying to convince the BoE to not cut the rates any further, as they feel it would not only put savers in more of a disadvantage but it would also affect the mortgage market in a negative manner.
The BSA’s director general Adrian Coles thinks the BoE should focus on putting cash into the economy instead of cutting rates. “We need to encourage an increase in the flow of funds into the mortgage market, not take steps that would further restrict that flow,” he said.
