Savers in UK put off by low interest rates, it is claimed

News - Savings

Written by Ray Clancy

Wednesday, 06 January 2010 09:19

People in the UK are increasingly confident that they will save more in 2010, according to a new survey. But figures from building societies suggest low interest rates are discouraging savers.

Men in particular are keen to increase the amount they save for the first time since spring of 2008, according to the latest Quarterly Savings Survey from NS&I, one of the UK's largest financial providers with almost 27 million customers and over £96 billion invested.

Encouraged by recent reports of a financial upturn, British savers are more confident in their outlook with over a quarter of the population, some 27%, saying they are more likely to save money in the next 12 months than they did last year.

Almost a third of male savers, 30%, say they will save more compared with 25% in the autumn of 2008. The survey also shows that women are more consistent in terms of saving. Some 24% expect to save more in the coming year, the same figure as in autumn 2008.
‘People are increasingly confident that they will save more over the next year than they have done in the last year. Improving prospects in 2010 may be one reason, or it could be that people are taking the New Year as an opportunity to review and refresh their finances, and to increase their savings to boost their financial security,’ said Tim Mack, NS&I's savings spokesperson.

Greater London, Wales, East Anglia and the North East England are the areas displaying the most certainty, while people in the South West are the least optimistic, where just 22% of people in this area thought they would save more in 2010.

Meanwhile, the latest official figures from the Bank of England show that consumer credit fell by £400 million in November as credit card lending rose again but other lending dropped back. Credit card lending increased by £200 million but other loans and advances fell by £600 million.

Mortgage lending is increasing, the figures indicate. There was a £1.5 billion increase in mortgage lending in November, up from the £1.1 billion rise in October.

Separately, the Building Societies Association said gross mortgage lending by building societies was £1.6 billion in November, down from £1.7 billion in October and below year ago levels.

In the savings market balances held in savings accounts at building societies fell by £600 million in November. After interest credited to accounts is excluded, building societies had a net withdrawal of £800 billion in November.
According to Adrian Coles, BSA director-general, low interest rates are putting savers off. ‘There is little incentive for people to increase savings while the bank rate remains at its current low level and many may prefer to use their money to pay down debts, finance spending or invest elsewhere,’ he explained.