Better savings rates wanted over Help to Buy
More potential home buyers have said that they would rather have been offered better savings rates to help them save to buy a home than the cheaper credit that has been made available from mortgage lenders under the Government’s Help to Buy scheme.
Savings accounts have seen the fastest rate of withdrawals in almost four decades, as meagre returns, most of which are well below the rate of inflation, force savers to take other options. In total £23bn was withdrawn from long-term savings accounts over the last twelve months.
The Mortgage Advice Bureau says that many who choose to withdraw the savings either spend the money, or move it to a current account, where they have easy-access to the money. Figures from research conducted by the Mortgage Advice Bureau show that 47pc would rather the Government had commissioned a scheme to encourage banks to offer higher savings rates, compared to 45pc who have stuck by the scheme to offer 95pc loan-to-value mortgages.
Under the Help to Buy scheme, the Government guarantees up to 15pc of your loan, meaning that in order to get a real-term 20pc mortgage, you need just a 5pc deposit. For lenders this takes a lot of the risk out of the loan, and means they can offer mortgages to those who would otherwise miss out.
While saving more money for a higher deposit will save borrowers a sizable amount over the long-term, as opposed to borrowing more than they can really afford, support for Help to Buy has remained due to the fact that it provides an immediate solution for those looking to buy a home.
Brian Murphy, head of lending at the Mortgage Advice Bureau, echo’s this: “Offering high interest rates on savings to remove the need for the 95pc mortgage is a novel idea, but it could still require an exceptionally high rate or a lengthy period of time for enough interest to accrue so people can save the equivalent of a 20pc deposit on a home”.
Savings rates have fallen since the introduction of Funding for Lending and Help to Buy, both Government initiatives, as banks and building societies move from relying on savers’ cash and place more emphasis on those borrowing money from them for mortgages and business loans.
Need advice?
If you have any questions about borrowing for a mortgage or investing for your future, please contact our financial advisers who will be happy to help.
Share this..
Related stories
Britons 'unprepared' for financial emergencies
The majority of Britons are failing to set aside enough money to cover sudden financial emergencies, new research has indicated.A poll commissioned by Birmingham Midshires found that a mammoth 95 per cent of people would not be able to cope with the cost of providing long-term care for an elderly relative.Those in their early 20s were found to be the least prepared, with 97 per cent reporting that...
Read MoreSavings 'on the up' as inflows increase
People are putting more savings into building societies accounts, it has been claimed.According to the Building Societies Association (BSA), inflows hit £853 million in May - the highest total for the month for six years.A possible reason for the increased savings figures was provided by a separate BSA poll among customers, which showed that 74 per cent expected house prices to fall further in th...
Read MoreWorry over Gender gap in Pension Savings
An investigation from Scottish Widows has revealed that on average women pay around £800 per year less than men into their pension pot. This has caused concern over their financial security after they retire. While 12 months ago the gap stood at £700, a new study has revealed that it is now closer to £800. In all this difference may not seem that significant, but over a long period of time t...
Read MoreSavers advised to invest despite market concerns
The increasingly unstable financial markets should be used by potential investors to their advantage, a UK investment broker has said.Recent developments on the worldwide markets saw the FTSE 100 fall by 57.5 points to 6,058.7 at the close of trading yesterday, but knowledgeable investors could still find good opportunities to invest, according to Hargreaves Lansdown.The broker advises that equiti...
Read MoreChildren Showing Parents how to Save
Research shows that children are becoming more accustomed to saving than ever, with 75pc of kids having their own bank account. 81pc of those children have also deposited money into their account in the last year, according to a study by MyFamilyClub. It seems children are learning the lessons from parents, who on average have borrowed £4,211 excluding their mortgage, and are actively saving f...
Read More