UK banks increase savings rates to fund mortgages
Over the last few weeks there has been a significant increase in savings rates across UK with banks and building societies all very keen to secure finance for the future. By increasing savings rates to around 5%, a full 4.5% higher than the UK base rate, they are then able to charge in excess of 5.5% for mortgage arrangements and take the difference as their profit.
It is no surprise that we have seen a spate of fixed-rate savings bond deals, many of which are weighted towards the end of the period when bonus payments are made. This will ensure that the vast majority of savers will actually retain their funds with the banks or building societies in question in order to obtain their bonus at the end. Those who leave early will not only lose out on the bonus payment but will effectively have financed UK mortgage companies (i.e. banks and building societies) with cheap credit.
If you see a deal which looks too good to be true then you really do need to take advice and do your homework. There are many factors to look out for including bonus payments at the end of a fixed-rate period, penalties for early withdrawal, minimum deposit figures and other similar criteria which can change the overall look and feel of any "good deal".
Share this..
Related stories
UK mortgage agreements rise to 17 month high
The number of UK mortgage arrangements confirmed in July this year rose to 38,181 which is a significant increase from June which saw 35,564 mortgage arrangements agreed. This is the highest monthly mortgage count since February 2008 and while the figures alone are very encouraging it was interesting to note that the average loan size has also increased by 1% to just under £140,000. So what next?...
Read MoreUK unemployment jumps by a record amount
The number of unemployed in the UK jumped by a record 138,000 people last month to bring the total number of unemployed in UK to in excess of 2 million people. This is a dramatic yet fully expected increase in unemployment at a time when the UK economy is apparently in freefall. Today we saw a heated prime ministers question time when Gordon Brown and David Cameron clashed on a number of occasions...
Read More100 per cent mortgages solution for first-time buyers
New buyers taking out mortgages have increasingly chosen to secure loans on the full value of their home in order to get onto the property ladder, new research has shown.Studies by the Mortgage Advice Bureau revealed that almost one in ten mortgagers now opt to borrow the entire value of their property or more.The number of first-time investors selecting a 100 per cent mortgage rose by 21 per cent...
Read MoreUK banks fight back over PPI ban
Despite apparently agreeing to recommendations from the Competition Commission earlier this year, Barclays and Lloyds bank are today challenging the blanket ban on PPI (payment protection insurance) being sold alongside a number of financial products. Under the current guidance of the Financial Services Authority (FSA), UK financial companies have until 29 May to withdraw PPI policies from literat...
Read MoreLord Mandelson attacks Kraft Foods
Only a week after suggesting that he had negotiated some kind of long-term commitment to Cadbury from its new owner Kraft Foods, Lord Mandelson is today on the attack after the announcement of 400 job losses at a Bristol-based Cadbury factory. The operation will close next year with production transferred to Poland where the cost base is more attractive for Kraft Foods. So why were we given a diff...
Read More