The Monetary Policy Committee's decision to increase base rate by a further 0.25 per cent on 11 January caught everybody on the hop, from financial commentators through to the banks and building societies themselves. The rate increases of August and November last year have so far failed to dampen demand in the housing market, but it was the increase in inflation that prompted The Bank of England to take action a month or two earlier than anticipated.
The media is awash with doom and gloom stories on the impact this will have on mortgage customers, but there are two sides of the coin, and now for the first time for a number of years we are starting to see savings rates break through the six per cent (gross) barrier.
A couple of products launched this month have caught the eye and will hopefully intensify competition within the savings arena even further.
Birmingham Midshires is currently top of the Moneyfacts.co.uk chart for fixed rate accounts with its fixed rate bond offering 6.05% for anyone willing to tie their money up for 12 months.
Last month I mentioned that headline grabbing regular savings rates being offered by some of the big high street players, were perhaps not quite as attractive as they first appeared, due to the terms and conditions attached to what could only be described as limited offers.
I'm pleased to report that Nationwide Building Society has bucked the trend with its new regular saver account, where the rate of interest paid depends upon the amount your balance increases each month, thus rewarding the effort to save more.
If your balance increases by less than £100 during the month (you can make withdrawals, but it's the net increase that determines the interest rate) you receive 4.25% gross on your entire balance, but increase your balance by between £100 and £200 and you'll be rewarded with 5.75% gross, even more than the current darling of the savings world, namely IceSave at 5.70% gross. If you're in a position to raise your balance by between £200 and £250 per month, you'll receive the top whack of 6.25% gross.
All in all a good start to 2007 for savers, and if the city analysts are correct in their assumptions, there is every chance of further positive news before we reach the summer.
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