Tuesday 10th July 2007
Savers and homeowners with offset mortgages may benefit from the recent interest rate increases, it has been claimed.
Financial services providers including Nationwide and cahoot are among those to pass the full 0.25 per cent July increase on to customers via their savings accounts.
Nationwides regular savings account now pays 6.75 per cent gross interest per annum, while the firms instant access individual savings account gives 5.75 per cent gross.
Meanwhile, cahoots instant access savings account now pays 5.75 per cent for balances of up to £250,000, matching the Bank rate.
Jeremy Sutton, head of Tesco Savings, advises consumers to shop around to ensure they are obtaining the greatest return on their savings.
"The key to instant access savers getting the right account with the right attributes is to shop around," he explains.
"Make sure you know what rate youre getting and what your companys track record is like for passing on base rate rises."
Matthew Carter, divisional director of mortgages and saving at Nationwide, adds that Britons looking to manage their monthly outgoings could do so by taking out a fixed-rate mortgage rather than one which tracks the base rate.
"We have a switch and fix facility available allowing them to switch to any of our fixed-rate products without incurring an early repayment charge," he states.
However, research from the Council of Mortgage Lenders (CML) recently suggested that homeowners may benefit more greatly from an offset mortgage.
The CML detected a widespread increase in uptake of offset mortgages among those switching from a different package and in new lending.
And the council informs borrowers that offsetting their savings against mortgage repayments could be a useful technique in minimising outgoings in light of the recent interest rate hikes.
"Any savings balance serves to reduce interest costs and this potentially helps to mitigate the impact on mortgage payments arising from higher interest rates," the CML notes.
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