UK savings level rise as best buy rates pushed up

Friday, 16 October 2009 10:45

September saw Brits return to saving and intentions to save are at a record high.

The Nationwide saving index measures savings habits and intentions to save and has found levels of saving are at the highest since November last year.

The rise follows a summer dip in the amounts being put to one side.

Savers of late have been dragged in two directions over saving.

While the recession has increased the need to create some level of buffer in case the worst happens, low interest rates have reduced the incentive to save.

The research based on a poll of 1,000 people from Nationwide on the savings environment found those polled saw it was the best time to save since the end of 2008 - as savings rates are now rising.

The index measuring savings intentions was at its highest level ever - as more people at least recognise the importance of savings, although it is uncertain if they will all put these plans into action.

Andy Hutchinson, head of savings at Nationwide, said increased savings was matching increasing consumer confidence.

"It is possible households are becoming increasingly confident that the recession is coming to an end, even though their positive sentiment may be premature," he said.

"This could have boosted confidence in consumers' ability to save in the future and it will be particularly interesting next month to see the impact of the recent ISA changes for the over-50s."

However, he warned recent falls in savings should serve as a warning that the market has not stabilised.

In the UK savings market at the moment, there is a clear distinction between savings bonds and instant access.

Leading the instant access market is Citi bank with its Flexible saver at 3.30 per cent, ING Direct and Sainsbury's Finance both have deals at 3.20 per cent, while Tesco Bank and Alliance & Leicester have accounts at 3.00 per cent.

On the savings bond market, Yorkshire building society has a five-year fix at 5.30 per cent, as does Principality.

Barclays and Halifax have five-year bonds at 5.25 per cent.

On the shorter fixes, Progressive Building Society has a one year bond at 3.65 per cent, as does Chelsea Building society.

Saga has a one year bond at 3.75 per cent and the Post Office has one at 3.70 per cent.

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