British savers and investors hoping that low interest rates will rise in the next year, study shows

News - Savings

Written by Ray Clancy

Tuesday, 28 September 2010 08:56

A large number of British people, savers and investors, believe that historic low interest rates will increase in the next 12 months, a survey indicates.

Some 68% expect the Bank of England base rate to increase over the next year and 11% think it will go up to 2% or higher, according to the Santander Savings latest quarterly report.

It also reveals that the average amount of cash savings in the UK is now £20,757 and some 42% of adults currently save nothing at all, but one in four plans to increase the amount they save each month.

Santander Savings is predicting a shift in demand towards savings accounts that track the base rate over the next 12 months and has recently launched new issues of its competitive Loyalty Tracker Bond and Tracker Bond for those savers keen to not miss out on any rises in the base rate.

With the average savings account now consisting of over £20,000, a forward thinking 37% of Brits say they already plan to keep their savings in a rate tracker account in order to take advantage of any movements in the base rate.

Overall 28% believe that the current 0.5% base rate will stay the same for the next 12 months, 33% think it will go up to between 0.5% and 1%, some 24% think it will increase to between 1% and 1.5% and 11% think it will be 2% or higher in a years time.

A small minority actually think the base rate will go down. The report says 3% think it will decrease to 0.25% while 2% believe it will actually go down to 0%.

The average person is now saving £102 each month, a figure that has fallen by a fifth, some 21%, since February of this year. Just 5% plan to decrease the amount they set aside each month and the remaining 70% plan to maintain their current level of saving, according to the report.

‘There’s clearly a widespread expectation amongst consumers that the Bank of England’s base rate will rise over the next year. We’re really pleased to see that so many people are already planning to take advantage of these predicted movements by ensuring that their money is saved in an account that tracks the base rate,’ said Reza Attar-Zadeh, director of savings and investments at Santander.

‘We’re always looking at ways in which we can reward our customers. The Loyalty Tracker Bond has been specifically designed for existing Santander customer to get a better deal but anyone who switches their banking to us can also benefit,’ Attar-Sadeh added.