As speculation mounts over a further cut in interest rates today, the Building Societies Association have pressed the case for savers, in calling on the Bank of England not to cut rates again.
The fall in bank rate from 5.75% to 1.5% since the credit crunch, has had a severe impact on saving rates as lender try to balance their need for deposits with falling mortgage rates.
Adrian Coles, Director General of the BSA, said; “the reductions in interest rates have seen income from savings drop by almost 75%”.
The release highlighted pensioners reliant upon interest from savings for income, rather than from pension as being among those hardest hit, as prices would have to fall by 75% for them to maintain their living standards. It also claimed many savers have not had the full impact passed on.
The BSA also voiced concerns that mortgage availability is now a greater worry for borrowers than the cost. Their property tracker survey found that concerns over getting a large enough mortgage or getting a mortgage altogether had overtaken affordability as borrowers primary concern.
Mr Coles said; “a further reduction in interest rates now will make people even less likely to save and disrupt further the flow of funds into the mortgage market, which is already significantly short of lending potential.
"We need to ensure that those with at least some capacity to supply funds for mortgage lending - personal savers - are encouraged to do just that, and that requires the MPC to refrain from making further cuts to the Bank Rate at least until the impact of recent reductions becomes clearer."