Savings rates slashed due to Funding for Lending

Leading lenders have cut the rates on a number of their savings accounts as banks decrease their reliance on savers for borrowing in the wake of the government’s Funding for Lending Scheme (FLS).

Financial institutions including Barclays, Lloyds Banking Group, Nationwide BS, Santander and RBS Group have signed up to the FLS, a scheme which is designed to offer lenders access to finance at lower rates than those that are commercially available.

Although savings created by the FLS are designed to be passed on to customers, Jason Riddle, from the campaigning group Save Our Savers, argues that lenders are now in a position where they can afford to drop rates.

“Financial institutions have been awash with savers’ cash in the past few months,” he said.

“They can afford to cut rates, knowing the majority of hard-pressed savers have nowhere else to turn.”

In the last few weeks Santander has made number of significant cuts to its savings accounts. Its fixed-rate cash ISA has fallen from 4% to 3.3%, while rates have also dropped on its esaver for new customers.

A Santander spokesman said; “We constantly review our range in line with market conditions and competitor movements.”

Last week Halifax also slashed the rate on its two-year fixed cash ISA rate to 2.75% from 3.25%. This means that new savers will miss out on £100 of tax-free interest over the term on each £10,000 in their account.

Fixed-rate deals on bonds have also been subject to cuts. The top rate available on a one-year fixed-rate bond is now around 2.4% after tax, down from 2.8% recorded three months ago.

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Posted by: WarrenWilson Categories: Finance Tags: , 1 Comment

One Response to Savings rates slashed due to Funding for Lending

  1. avatar jenny says:

    This is unbelievable, what reports are the government taking notice of, house prices are still too high developers are not reducing prices, and now the government is expecting people to take on yet more debt, horrible developments all over the country with huge rows of 3 storey houses where the garden for children to enjoy their childhood in is just about non existent with little or no sun, and they are huge prices for being so enclosed in brick walls, and the govenrnment is doing every thing to please the property developers I will never vote for them again and always have done. It now looks as though I will never have a home, as I can not get a mortgage, I can’t be the only one, no wonder the prices have been going up while anyone not looking thinks they have gone down, down from what exactly an over inflated price in the first place, stop blaming europe, now nothing for savers there is only one word to describe it, wicked. I hope someone who can make a difference will soon care about what people are being forced to pay.