In the world of finance, where there’s winners there must be losers. In this case the winners are home owners who are benefitting from better contractor mortgage rates at the expense of savers.
According to the finance and investment site Moneyfacts.co.uk, the average cost of a two-year fixed-rate contractor mortgage has fallen by 0.24% since November, but this has been matched by a 0.23% reduction in the average rate paid on five-year bonds, currently the most competitive area of the savings market.
Easy access business bank accounts have reduced by an average 0.06%, but they are not attractive to savers as they only pay rates of about 0.75%. Savers opting for tax-free Isas are also suffering with rates being cut from an average of 2.11% in November to 2.06% now.
Moneyfacts has suggested that savers are in for another torrid time in 2010 following one of the worst 12 months on record last year. With mortgage rates becoming increasing more competitive, the focus has shifted to borrowing as demand for savers’ money declines.
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