Released
on: October 9, 2009, 4:07 am
Author: uSwitch.com
Industry: Financial
Despite the base rate remaining static for six consecutive months, and with another hold expected from the MPC today, the latest market analysis from uSwitch.com reveals that savings providers are still intent on cutting rates across their product ranges. In the last month alone, 27 products have had their rates shaved by an average of 0.33% or up to 3%, in a move to safeguard profit margins.
Providers who have cut interest rates in the last month include:
No-notice
savings accounts
Lloyds TSB, Egg, Bank of Scotland and the Norwich and Peterborough Building
society are the 'not-so' fantastic four, when it comes to reducing interest
rates. Amongst this group, average cuts of 0.89% AER have been introduced
on no-notice savings products in the last month. Lloyds TSB asserted itself
as lead culprit, with the rate of its Monthly Saver account slashed by 3%, meaning
it now pays interest at a measly rate of just 2%. Bank of Scotland has also
disappointingly cut rates on its Instant Access Savings Account Reward by between
0.20% and 0.35%.
It is also bad news for the grey market with Norwich and Peterborough's 50 Plus Savings account now paying a meagre 1.25% following a rate reduction of 0.15%
Fixed
Rate Bonds
In the fixed rate bond market, around 10 providers have been guilty of introducing
new issue bonds at significantly less competitive rates than their withdrawn
predecessors. On average, this group of providers' newly launched bond rates
are up to 0.55% lower than the products they replace. Nationwide is amongst
the worst offenders, with rates on its fixed rate bond range slashed by up to
0.50%.
Cash
ISAs
Over 50s savers looking to top up their ISAs from this week will be particularly
disappointed by the news that, in advance of the increased limits coming into
effect, four providers (Lloyds TSB, RBS, NatWest and Norwich and Peterborough
Building society, all implemented rate cuts across their ranges by an average
of 0.25%. Lloyds TSB has imposed the most significant rate cuts, amounting
to 1% on its 1 year Fixed Rate ISA (£9,000 - £15,000 investment tier). Similarly,
RBS has introduced a 0.25% rate cut across many of the tiers within its Instant
Access Cash ISA range, whilst NatWest has followed suit with the introduction
of rate cuts of up to 0.25%, rendering the returns on some of these accounts
as low as as 0.5%.
Rumina Hassam, savings expert at uSwitch.com comments: "Savers haven't had an easy ride over the last 6 months, and these latest rate cuts must be yet another bitter pill to swallow. With the base rate remaining static, providers no longer have an excuse for cutting rates as they did during the period October 2008 to March 2009, yet still savers are being penalised with more savings shavings.
"Savers need to keep a close eye on providers who use the 'withdrawal and replace' tactic to sneakily introduce products with less competitive rates. In particular, rates on shorter term 1 and 2 year new issue bonds are becoming less and less competitive as providers seek to encourage savers to tie in their cash for longer. Savers also need to be aware that market leading rates across savings products are rarely around for long, with some only lasting a matter of weeks. Savers need to be agile in applying for the stellar rate products as soon as they appear – in this case good things don't come to those who wait."
See the full version of this press release.
For
more information please contact:
Tracy North 0207 802 2925 / tracynorth@uswitch.com
About
uSwitch:
uSwitch.com is a free, impartial online and telephone-based comparison and switching
service, helping consumers compare prices on gas, electricity, water, heating
cover, home telephone, broadband, digital television, mobile phones, personal
finance products and car insurance.