Low interest rates cost savers £43bn since March 2008
Thursday, 08 September 2011 10:58
The Bank of England has released financial information that reveals the effect that the historically low level of base rate has had on the finances of both savers and homeowners.
Ahead of the latest meeting of the Bank of England’s Monetary Policy Committee (MPC), where it is virtually certain that base rate will stay at 0.5 per cent for a 31st consecutive month, the disparity of the consequences of this policy has been revealed.
Savers have lost out to the tune of £43 billion in the two and a half years that base rate has been this low because of a low return of interest on their savings. However, those with a mortgage have gained by £51 billion in total by paying less in mortgage interest payments.
The figures are arrived at by comparing income levels before base rate fell to 0.5 per cent and after.
Many pensioners, who have been financially prudent throughout their lives and have saved to fund their retirement, have lost out due to low interest rates. Meanwhile, homeowners are paying levels of repayment interest on their mortgage borrowings that are almost unprecedented and historically low.
Simon Rose of Save our Savers said in a statement yesterday following the decision by National Savings and Investments: “Who will help savers now? Not the Bank of England's MPC, which is too scared to tackle inflation, even though that's its job. George Osborne has stressed the importance of savers to the economy in the past. Perhaps he will prove a man of his word and listen to our plea to assist savers by suspending income tax on savings interest.”
Use the Myfinances.co.uk comparison tables to find a better deal on a new savings account.
Use the Myfinances.co.uk comparison tables to find a better deal on a new mortgage.
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