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Savings Rates....what A Joke

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Just had a quick look at savings rates available right now.

What a joke,

The rates are insanely low.

The only banks offering anything are failed/failing ones and dodgy lenders as far as I can tell.

The tories will have shot themselves in the foot with a cannon by the time the election gets here.

The worse/best thing they ever did was set the parliament to a fix term, they probably thought that was help them...now it will destroy them.

I'd write to my MP but the last time I did he told me he had more pressing matters, he had people on benefits that needed help ( a tory too ).

I'll be voting UKIP.

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Just had a quick look at savings rates available right now.

What a joke,

The rates are insanely low.

The only banks offering anything are failed/failing ones and dodgy lenders as far as I can tell.

The tories will have shot themselves in the foot with a cannon by the time the election gets here.

The worse/best thing they ever did was set the parliament to a fix term, they probably thought that was help them...now it will destroy them.

I'd write to my MP but the last time I did he told me he had more pressing matters, he had people on benefits that needed help ( a tory too ).

I'll be voting UKIP.

UKIP have now gone odds on with the bookmakers to win at least one seat

1.64 is the best price £64,000 per £100,000..... beats saving rates 1.013.....

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It's partly frustrating, but I try and keep things in context, and I'm ok with it.

Although you would have thought more attractive rates might open up with bank stress tests ahead. It possibly because there's so much debt, and banks not ready (Co-op / RBS - got letter from RBS the other day with my esaver dropping from 1% to 0.5%)

Many people are raiding their savings, to live on and chase higher yield (possibly at extreme/risky buying prices), which for me is deflationary.

http://news.sky.com/story/1274709/isa-deposits-suffer-unprecedented-fall

Main point = It doesn't bother me too much, getting a 'big fat zero on savings', if in the not too distant future, it makes for a +ve return against crashing house prices and other buying opportunities.

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I think the latest ecb move has shown that they will do anything to achieve what they believe is required, unfortunately that will result in a lot more pain for savers.

The trouble is savers are a stubborn lot who will never give in ,if anything they will save more than ever.

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Many (if living off capital) will SPEND even less. Many people have enough cloths to last a lifetime, enough 'toys' and these will only be replaced when the old whatever fails. Fortunately the banks do not need savers they only require borrowers and only then if the debt underwritten by the taxpayer / savers. Full circle. Debt is wealth.

A certain group will; myself included, affecting aggregate demand. And so much money is being sucked into current debt and future debt obligation repayments anyway - including many younger people on HTB at high prices, which is troubling for other producers in the economy.

Shop prices fall 1.4% to record thirteenth month of deflation
4 June, 2014
...Shop prices deflated 1.4% year-on-year, the same rate as recorded in April, making May the thirteenth consecutive month of deflation. ... Food inflation was unchanged at 0.7% from April, the lowest ever recorded. Non-food recorded 2.8% deflation in May from 2.7% deflation in April. The category has reported deflation for the fourteenth consecutive month.

My view is the crunch is coming from a lack of borrowers.

It's a frenzy with bomad (random recent info link), yield chasers, BTLer, regular buyers, foreign wealth all trying to buy up assets for the moment.

Everyone is going on about it being housing supply the issue - difficult to believe they've forgotten what happens in a credit-crunch, and perhaps similarities to be repeated in a buying/demand-vs-current prices side fall-away.

Tuesday 03 June 2014

Ed Balls, the Shadow Chancellor, told Sky's Ian King that rising house prices were fundamentally a supply and demand issue.
"If supply is the problem we need more affordable homes, more houses being built - a few thousand houses in Ebbsfleet is not going to do the job."
"Credit availability is not a problem now but what we see is that demand is very low," Nowotny, who is also governor of the Austrian Central Bank, told a news conference on Austrian bank stability on Wednesday.
"The possibilities of monetary policy are more or less limited," he added. "It is the demand side that decides investments."
Edited by Venger

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Of course its a lack of borrowers, the economy has mopped up all the willing and capable borrowers, just the dregs of effectively subprime left.

Talk about banging your head against a brick wall.

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Just had a quick look at savings rates available right now.

What a joke,

The rates are insanely low.

The only banks offering anything are failed/failing ones and dodgy lenders as far as I can tell.

The tories will have shot themselves in the foot with a cannon by the time the election gets here.

The worse/best thing they ever did was set the parliament to a fix term, they probably thought that was help them...now it will destroy them.

I'd write to my MP but the last time I did he told me he had more pressing matters, he had people on benefits that needed help ( a tory too ).

I'll be voting UKIP.

They're bringing in 4% NS&I bonds for pensioners to deal with that.

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You get some reasonable rates long term on isas, 2.75% on 5 years for example. Otherwise its crap, esp if you pay upper rate tax. No idea what tot do with my inherited cash, might try some speculative art buys and shares...

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Just had a quick look at savings rates available right now.

What a joke,

The rates are insanely low.

The only banks offering anything are failed/failing ones and dodgy lenders as far as I can tell.

The tories will have shot themselves in the foot with a cannon by the time the election gets here.

The worse/best thing they ever did was set the parliament to a fix term, they probably thought that was help them...now it will destroy them.

I'd write to my MP but the last time I did he told me he had more pressing matters, he had people on benefits that needed help ( a tory too ).

I'll be voting UKIP.

Why should we reward the rentiers - rates should and will be negative ..... If you had hoarded all the natural resources on a desert island would you expect the other inhabitants to (i) come and add what little they have managed to forage to your pile, or (ii) take some of your pile to even things up ....

Edited by admann

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Didn't savings rates fall by about 1.5% under FLS. So why isn't this starting to reverse now that FLS has ended?

Because the alternative is only risky, over-valued investments?

Including standby for the antique price crash, on the back of everyone clearing out their savings accounts buying such things at silly high prices, looking for better yield/capital protection. They'll be selling for a few pennies in the pound, in time to come, in my view.

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They're bringing in 4% NS&I bonds for pensioners to deal with that.

I may take them to court over this. Its discrimination and against their European laws id wager.

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Didn't savings rates fall by about 1.5% under FLS. So why isn't this starting to reverse now that FLS has ended?

Simple answer...its not really ended. The biggest lender is state owned...i wonder who is bank ruling it!

Collapse is inevitable.

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Didn't savings rates fall by about 1.5% under FLS. So why isn't this starting to reverse now that FLS has ended?

FLS hasn't ended. The drawdown period in which banks could borrow from the BoE for lending to households finished at the end of January, but borrowings can be rolled over for up to four years from the date of drawdown. Consequently a bank that took funding from the scheme in January 2014 will potentially still be using this cheap funding until January 2018.

As for why savings rates have continued to fall since the FLS drawdown window closed, this is most easily explained by the fact that deposits in the private sector excluding intermediate financial corporations (M4ex) continue to grow faster than loans to that sector (M4Lx):

MoneyAggregates0414.gif

The banks just don't need your money like they once did, and there's little competition for it.

The result is crappy rates for savers.

[Most of us are aware that loans create deposits, and we're used to the idea that one is the mirror of the other. In fact though it doesn't quite work like this: there are all sorts of reasons why the level of deposits can be rising at a different rate than the level of loans. QE is the most obvious example of the level of deposits being increased with no additional bank lending. To give another simple example, a bank may issue a long-term bond. Investors in the bond pay with bank credit, and this destroys deposits. Yet another example would be when a bank buys gilts - it credits the bank account of the seller of the gilts and this increases deposits. In all three examples the level of loans on the other side of the balance sheet is irrelevant.]

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The answer for those who can save a bit each month by spending less is to save and then buy.....avoid borrowing.

Leave the borrowing to those who can't afford to save.

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the thing is - this is not much of a bribe for the over 65s if that was their intention :

The rates will be set in the autumn, but Mr Osborne said he expects the one-year bond will pay around 2.8pc and the three-year bond will pay around 4pc.

the interest will be taxable

the limit to save is £10k in each bond

there are limited funds allocated for this issue

wonder what rates will be set in the Autumn if they take account of prevailing market conditions? :unsure:

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the thing is - this is not much of a bribe for the over 65s if that was their intention :

The rates will be set in the autumn, but Mr Osborne said he expects the one-year bond will pay around 2.8pc and the three-year bond will pay around 4pc.

the interest will be taxable

the limit to save is £10k in each bond

there are limited funds allocated for this issue

wonder what rates will be set in the Autumn if they take account of prevailing market conditions? :unsure:

I remember a friend of the family saying a pound saved after the age of 70 is a pound wasted. The guy died a few years ago.

It makes more sense to spend the capital than spend the interest when you get old.

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the thing is - this is not much of a bribe for the over 65s if that was their intention :

The rates will be set in the autumn, but Mr Osborne said he expects the one-year bond will pay around 2.8pc and the three-year bond will pay around 4pc.

the interest will be taxable

the limit to save is £10k in each bond

there are limited funds allocated for this issue

wonder what rates will be set in the Autumn if they take account of prevailing market conditions? :unsure:

It's still too much, and unfair seeing as many of them have enjoyed decades of excellent market conditions for savings rates, wage inflation, and pension returns already - as well as of course house price hyperinflation, with them owning much of the better housing stock work fortune.

Wealth of 8.4 million unmortgaged owner occupiers has risen £86 billion to £1.8 trillion. The balance of housing wealth continues to become ever more concentrated in the hands of mortgage free homeowners.

I argue anything to tilt them into having to sell is a good thing; in a way low savings rates has hopefully hurt them to some extent, even if many have more in savings, as younger people trying to save deposits.

Although I notice you were scoffing that this high-rate £10,000 limit would have any impact in encouraging them to downsize/sell for less than houses have been selling for in the past (thus helping to bringing down values of all other homes in an area). I agree, very little, but it helps tilt things. It's more of a bribe than others can take advantage of - including those saving for deposit, to those who are more likely to have housing wealth.

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Just had a quick look at savings rates available right now.

What a joke,

The rates are insanely low.

The only banks offering anything are failed/failing ones and dodgy lenders as far as I can tell.

The tories will have shot themselves in the foot with a cannon by the time the election gets here.

The worse/best thing they ever did was set the parliament to a fix term, they probably thought that was help them...now it will destroy them.

I'd write to my MP but the last time I did he told me he had more pressing matters, he had people on benefits that needed help ( a tory too ).

I'll be voting UKIP.

Yep. Surely the people that normally vote Tory (older people with lots of wealth, paid off mortgage, living off pension/savings) are the ones being screwed by low interest rates and they are the ones who are blaming the Tories. Low interest rates are there to save the banks and the very very rich (although the Tories spin it as helping indebted mortgage owners). If interest rates went up then they would get a lot more votes from the oldies who are eating into their savings, seeing their pension buys them nothing.

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Quite a few of the ISAs are offering close to 3%, Julian Hodge 5 year, for example, at 2.85%. They mostly have early exit options with penalties and the 15k top up option after 5th July. But 15k is a bit ne ither here nor there for those with 85k tranches piling up in various institutions. ;)

http://www.julianhodgebank.com/personal/rates/savings_rates.asp

Edited by crashmonitor

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The question should be what are you doing about it? Zopa are offering better rate a simple tracker fund would have earned you 89% over the last 5 years. Do some research and don't let them take you for a ride. I gave my dad my 5 year bond last year paying 5.15% gross in exchange for money. The ISA fund I invested in has earned 7.8%

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There are still a few options out there,

1. A low cost FTSE tracker will still be throwing off nearly 3% in dividends

2. Zopa is paying about 5%.

3. You can cherry pick a handful of decent top 100 companies that are yielding about 5%.

4. There are corporate bonds with solid balance sheet companies yielding over 5%, you can either pick them individually or via a fund.

5. There are commercial property funds yielding 5%.

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What's UKIP's policy on savings rates?

Pass. but it can't be any worse than that of the current government or Labour.

If UKIP get a substantial vote, I'm sure they'll listen to those who voted for them.

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