Wednesday, Jul 29, 2009
Where's Howard when you need him?
Guardian: Savers drain £2.3bn from building societies
The difficulties facing building societies were highlighted today with figures released showing they suffered the biggest monthly outflow of savings for 54 years in June — and warnings of continued withdrawals as unemployment forces savers to dip into their nest eggs.
Posted by happy mondays @ 10:34 PM (868 views) Add Comment
12 Comments
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1. Chrisch said...
Beat me to it - was just posting this. Maybe this is where the cash has come from for the bounce rather than people drawing down savings to buy stuff for day to day living?
2. enuii said...
Well whats the point of saving when you get sweet F.A. on it.
Plus with the value of the £ as it is many are having to fork out extra for their holidays away from wet and miserable U.K.
3. stillthinking said...
"Experts said"
Thank you so much Jill. Where would these savings go, either a UK bank or a foreign bank or cash under the mattress. The money goes from the poor winged duck building societies but to where? tra la la who knows where? Perchance another bank or a few pence off the exchange rate.
4. str 2007 said...
I suspect most of the money is going into property in one way or another.
Either STR's now buying or people topping up mortgage payments as their overtime has been cut.
5. uncle tom said...
I have a pretty good idea what is behind this, or at least a major component
Many pensioners spend the interest from their savings, but don't touch the capital. As interest payments collapsed, they were grudgingly forced to tap their capital to get by.
Interest rates on savings acounts now appear to be on the rise, probably a consequence of this cash exodus.
6. Cynicalsoothsayer said...
"Interest rates on savings acounts now appear to be on the rise, probably a consequence of this cash exodus."
...which will force up mortgage rates to pay for it. Or at least those rates they can change, variable rates and new borrowers.
7. alan_540 said...
@5 uncle tom...
I'd agree with this theory. The article says the money that flowed into "safe haven" building societies has now been put back into the more competitive banks savings accounts. And pensioners with large pots of dough wanting the best return will be keeping a sharp eye on the best interest rates ... and as the article says, the Nationwide isn't appearing in the best buy tables for savers... nuff said!
8. inbreda said...
I think there is also an element of people putting money under the matress. I have removed the majority of my savings from the banks - more as a protest vote. I don't mind missing out on 2% per annum for a while. They won't recapitalise with my money.
It is interesting that in a rising market, when someone bought a house they needed a big mortgage. Lending increased. And the person who got the money most likely bought another house. Net effect is an increase in lending.
In a falling market where interest on savings=zero, people are buying ever cheaper properties with cash. This is going to people who are probably exiting the market. Hence, sales volumes are depressed, savings amounts reduced, net lending reduced.
It's a lose-lose for the banks and EAs. They make profit on savings and borrowings - and now there is less of both.
9. tyrellcorporation said...
I recently ploughed 30k which came out of a nationwide bond straight into the stock market. So far I've made 26% which is slightly higher than the 3% being offered by NW. Maybe other people are doing this too.
10. Spectator said...
I would get your money out of the stock market before the H1 profit warnings come out.
11. inbreda said...
yeah - thanks tc I've got puts on the ftse. Can I have my 26% back please ;-)
12. tenyearstogetmymoneyback said...
The problem with the reduction in interest rates is that the lowest rates are now an insult.
When accounts were available paying 8% lots of people were content with 4% or so and couln't be bothered
to change. Now that top rate acoounts are about 4.5% but lots of instant access accounts are paying less than
a tenth of that there is far more incentive to swap to a better account.
Wait until the end of the financial year when people find they have only earned £5 on their £1000 savings and I
reckon alot more accounts will be emptied.