Financial Crisis is an Advantage for Savers
Posted on 16. Jun, 2009 by admin in Savings
Savers are benefiting from the worst credit crisis that the banks are facing for 20 years. The banks are wary of lending the money to building societies. Instead they are giving higher interest rate to savers. Banks are charging other banks much higher than before. The increase in rate for lending money has increased from 6.04% in August 2008 to 6.9% at present. As of the moment the Bank of England has an interest rate of 5.75%. One institution that has been badly affected is the Northern Rock which relies on the money markets to finance their businesses. To be able to survive the business the Building societies rely on High Street savers to have a greater amount of money.
A fixed rate is being offered by banks and building societies with a 7% tax on new bonds. Savers will take advantage of these bonds and prepared their money for possible tie up. This situation of money market will not last. In the coming weeks US Central bank will cut its base rate and the money market rates may drop. Experts also believe that the banks are collecting as much cash as they can in order to help the savers. Economic consultants stated that these rates are generous. The Capitol Economics states that the banks are stocking up their emergency money. This situation will continue until the uncertainty between the banks lessens and it may take weeks or month. Analysts are assessing as to whether the banks are willing to lend each other. Hedge funds are being affected because large retail banks will not allow others to put them under.