Thursday 10th May 2007
Holders of savings accounts have reason to celebrate following the Bank of Englands decision to raise interest rates to 5.5 per cent this month, it has been claimed.
According to National Savings and Investments, those with disposable income could stand to benefit from the increased base rate.
Dax Harkins, senior savings strategist, said: "This rate rise carries a silver lining for savers.
"On top of recent rises it is a further encouragement for people with disposable income to take advantage of higher savings rates."
The Post Office echoed the suggestions, urging consumers to switch to the most favourable savings account available.
While the firm promised to increase the rate on its Instant Saver account to 5.75 per cent from June 4th, other providers responded even more quickly to the base rate decision.
Capital One announced plans to pass on the rate rise via its Base Beater savings account, with the changes effective from Friday, May 11th.
However, the new rate to be offered on the account is to be slightly below that from the Post Office at 5.55 per cent.
Richard Norman, head of savings at the Post Office, also predicted that many Britons will be looking to "tighten their belts" as the rate rise is reflected in mortgage repayments.
The Council of Mortgage Lenders (CML) stated that this is likely to be an issue for about half of borrowers with variable rate packages.
Those on a fixed-rate mortgage - which the CML stated accounts for some four-fifths of recent mortgage approvals - were expected to see a "dampened" effect.
Consumers facing financial hardship as a consequence of the decision "should not panic", the Building Societies Association advised.
Director general Adrian Coles instead suggested contacting their mortgage lender at the earliest opportunity in order to elicit "a sympathetic response".
©
Everything on preparing your finances for your children's futures. From Child Trust Funds through to tax planning. Request your FREE brochures here.
