Mortgage Crisis to hit Savers' Pockets

Following the base rate interest cuts earlier this month, both Halifax and Bradford & Bingley have decided to cut their savings rate by more than a quarter points. Nationwide have also announced plans to cut rates by up to 0.3 percentage points.

With the mortgage market in a defeated state, banks are no longer making their expected profit targets in this area. The move to reduce saving rates is an attempt to increase profits in another area, a strategy that will be rolled out by most banks in 2008.

As banks and building societies attempt to claw back money on main accounts, poor publicity for them seems inevitable. During this period of bad press banks have very little to lose in terms of public favourability, and will therefore want to ensure that they achieve optimum savings.

Chris Eagle, Commercial Manager at creditchoices.co.uk, urges an open-minded and flexible approach to saving:

‘Savers should compare the market and switch to a more competitive rate, also the possibility of investing in an ISA should be thoroughly investigated. Existing ISA clients can maximise their allowance if they haven’t already’.

Here are a few tips on how to maximise your savings., and read our guide to ISAs vs. Savings Accounts.

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