Banks hold fire on savings rates
Updated on 06 October 2008
Banks are adopting a "wait and see" approach to savings rates in the current financial turmoil, say experts.
During the past week there have been just three changes made by institutions to savings rates, excluding the withdrawal of products by nationalised bank Northern Rock for competition reasons.
The figure is well down on around 20 changes made during the previous week, according to financial information group Moneyfacts.
The group said banks appeared to be adopting a "wait and see" approach, with institutions not wanting to make major changes that could panic savers, while others may be waiting to see what happens to interest rates on Thursday.
The lack of liquidity in the wholesale money markets has caused savings rates to soar during the past year, as institutions fought to get money through their doors.
But savers, who had previously been one of the few winners from the global problems, now appear to be willing to accept lower returns on their cash in exchange for security.
Michelle Slade, analyst at Moneyfacts.co.uk, said: "The past few weeks have shown that the consequence of the credit crunch is not just a mortgage problem, but has now arrived on the doorstep of most savers as well.
"The collapse of a couple of major US banks and quick overnight mergers of a few other institutions have placed consumers in a state of confusion and doubt about the security of their hard earned savings."
She said Moneyfacts.co.uk had seen a 66% jump in visits to its savings pages during September, while its helpline had been inundated with calls from consumers all wanting to know if their money was safe.
Savers could see the number of different products they have to choose from reduce in the coming months as a result of consolidation in the banking sector.
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