CCR Magazine

CCRi banner ad
You are here  :Home arrow News arrow Rock-bottom interest rates stunting growth in UK savings accounts
Contact Us Newsletter Signup RSS Feeds

Latest News Headlines

Headlines

 
Commercial Credit News

Headlines

 
Rock-bottom interest rates stunting growth in UK savings accounts PDF Print E-mail
Thursday, 05 November 2015

According to a new Timetric report, interest rates on all savings accounts are at record-lows in the UK and are failing to entice customers despite improving economic conditions. Growth has been slow across all savings accounts, apart from Individual Savings Accounts (ISAs), which have been growing mainly due to the upper limits being raised every year since 2010, as opposed to attractive interest rates.



Household cash deposits, for example, rose from GBP1.30 billion in January 2015 to GBP1.32 billion in August 2015, after recording an average monthly growth rate of only 0.41%. Despite improved growth over the same period in 2014, the rate is sluggish given the improvements in real wages in 2015, as consumers have opted to spend money or pay existing debts.

According to Ben Carey-Evans, Analyst at Timetric: “The central bank rate remaining so low has meant that banks have had access to extremely cheap funds and therefore have not needed to compete for savings accounts from consumers. This in turn has made borrowing from banks cheaper, meaning taking on debt for high-value purchases or moving house has been cheaper throughout the review period, so investing and paying off debt has been more appealing than stashing cash away in savings accounts.”

The total amount of money subscribed to all ISAs has been rising gradually since 2007, and Timetric expects this trend to continue until 2019. Growth of around 5.1% is predicted for FY2015–2016 as savers begin to utilise the increased upper limits for cash ISAs, before growth steadies to approximately 3.9% by the end of 2019.

Timetric forecasts just 3.1% growth in 2016, leading to GBP81.3 billion subscribed to ISAs at the end of the year. The growth rate will remain around the same level for the rest of the forecast period, increasing by 4.7% to reach GBP90.9 billion in 2019.

On the other hand, household retail saving balances are expected to rise at a CAGR of 2.30% over the next five years, to reach GBP1.31 trillion in 2019. Growth will be buoyed initially by rising real wages and low inflation; however, current levels of inflation and low interest rates are not expected to last into 2016, meaning the cost of living will increase, reducing many households’ capacity to save. Increasing interest rates over the latter part of the forecast period, however, will attract those consumers who can afford to save more, meaning that deposits will continue to grow.
 
CCRI
3 October - Guoman Tower Hotel, Central London 

CCRInteractive, in association with Marston Holdings , is the largest and leading one-day conference from the publishers of CCRMagazine – a truly national and international event for the credit industry.

This landmark event allows delegates to: Learn best practice of how to increase profitable sales in today’s economy. Understand the key compliance issues and how they will impact upon you. Discuss the legislative and regulatory framework and how it will effect you. Consider the potential effects of Brexit on your business. Discover the latest innovations in the market to improve your collections. Motivate your staff to achieve ever improved results.

To book to attend in 2017, contact Stephen Kiely  or Alison Lucas. To find out more about being part of this landmark event, please contact Gary Lucas
CCRI 

 Forums International Ltd

Forums International Ltd

 Attendance at your first meeting is free of charge, and please quote reference 'CCR2016' to receive the special 10% discount off of your first annual subscription.

Find out more here.

latest issue

CCR Cover

The latest edition of CCR Magazine, the leading editorial publication in the UK credit industry, is out.

Read the latest issue online

The Credit Excellence Awards

Awards 

Tuesday 3 October - Guoman Tower Hotel, Central London


Do not miss your chance to meet and network with the Winners and Finalists at the Credit Excellence Awards, in association with Hoist Finance.


To book your place to attend, please contact Alison Lucas.


subscriptions

CCR is the premier magazine for consumer and credit professionals. It provides an independent voice to the industry, breaking major news stories and running in-depth features.

As a magazine, it works with and campaigns on behalf of the credit industry to promote its importance as a centre of potential profit and business development to the wider business world.

Subscribe to CCR Magazine

CCR World Magazine


 

Providing information and analysis for thousands of senior credit professionals worldwide, every quarter.

Find out more

GTS Media Ltd
81 Cambridge Road
Southend-on-Sea
Essex
SS1 1EP

Registered in England No: 05483197