What the papers say- 8th – 9th August 2009

What the papers say- 8th – 9th August 2009

With the Bank of England holding the base rate at 0.50% for another month, and a general belief that interest rates will remain stable for the foreseeable future, the financial press this weekend reported on borrowers switching their preference back to tracker rates. Experts in The Times predicted however that the recent decision to pump an additional £50 billion into the UK economy could result in lenders reducing their fixed rates again.

On a practical level, the Sunday Times suggested that an improvement in interest rates is not a signifier of an end to the credit crunch, with frustrated homeowners and potential buyers still struggling to obtain mortgage finance at a time when lender criteria is stricter than ever. Accord is the latest lender to reduce their flexibility, clamping down on homeowners who want to keep and let their previous homes, as well as turning down borrowers who have been out of the market for a year. Other lenders are taking a more hardline approach to credit scoring, so the general advice given was for borrowers to check their credit file before applying, as well as paying off as much of the mortgage as possible to boost equity and grab a competitive rate.

The Telegraph urged customers to shop around for both mortgage and savings products, amid fears that financial institutions will start to repair their balance sheets at the expense of loyalty by charging more for their products. Simply sitting on a Standard Variable Rate may not be a beneficial option anymore, as shown recently by Skipton’s introduction of an SVR floor.

Elsewhere in savings news the Sunday Telegraph looked at ISAs as a way of planning for retirement, whilst the Sunday Times advised savers to avoid long term fixed rate bonds despite the attractive interest rates on offer.

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