Since changes to the Funding for Lending Scheme (FLS) were announced last week, savers might finally start to feel more positive.
Under the revised plans homeowner lending will be scaled back with the scheme instead focusing on the business sector, meaning banks and building societies will start to become more reliant on savers' cash again – which means competition, and ideally savings rates, could finally start to rise.
The news sends a positive message to the nation's savers, many of whom have been stuck with record low savings rates. Although there's unlikely to be an instant improvement rates could slowly start to nudge up, and it's thought ISAs and fixed rate bonds could see the quickest change.
"Savers must be dancing in the street at the announcement of the withdrawal of the Government's Funding for Lending Scheme. Equilibrium should finally be restored, and about time too.
"Of course, it will take a little while for better savings rates to hit the Moneyfacts best buy tables, but as ISA season is almost upon us that would be the obvious place to see the first signs of rate recovery."
However, fixed rate bonds were hit hardest by the FLS, so news of the scheme's change of direction is particularly encouraging for this sector. Even now there's a degree of competition starting to return to the fixed rate market – although it's suffered it's still the best place to go if you want a competitive deal, with the average five-year bond currently paying 2.55% compared to 2.46% just six months ago.
It's hoped further improvements will be witnessed over the coming months, but savers might want to consider opting for a short to medium-term fix or perhaps an easy access version (albeit at lower rates) to get the best deal now whilst ensuring they can make the most of any rate rises when they happen.
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