Low-interest rates, stockpiling purchases, closed schools, slumping stock prices. Almost all areas of life are being affected by the spread of the COVID-19 virus.
However, in troubled times fixing your interest rates now might be a life-line for your savings later on.
Raisin UK co-founder, Kevin Mountford, gives his analysis on how Covid-19 could affect UK savers: “We may only be a few weeks into the current crisis, but it’s already been a roller coaster ride for UK savers. The first budget from the new Chancellor of the Exchequer, while a great boost for the wider economy, could be categorised as being largely ineffective for UK savers.
“The real headline came during the Bank of England’s earlier announcement of a rate cut to 0.25% (which later dropped again) and the package of measures to support the economy in the wake of Covid-19. The UK banking sector is deemed to be more robust than it was back in 2007, however, as far as savers are concerned, the new Term Funding Scheme and Countercyclical Capital Buffer will free up over £290 billion in funding for banks to lend to businesses. This is money that banks might no longer need to attract from retail savers and this is significant as it represents around 11% of the £1.7 trillion UK savings market.
“With today’s news that the Bank of England interest rate was reduced from 0.25% to 0.1%, we may start seeing savings rates being reduced across the board. Although some easy access offers remain strong, the recent rate reduction may not have been applied yet, but it could only be a matter of time before this changes.”