Why are savers not wanted by the banks ?

[sarah_louise]

I thought the banks would want Savers.

All the interest rates but especially Cash ISA's are being reduced to almost no interest at all after inflation is considered.

Why is this do you think ?

[factor-fiction]

It's because the base rate is so low- savings rates rise and fall in line with base rates. Banks need to maintain a differential between savings rates and loan/mortgage rates. But yes banks want savers so you can still get some pretty good rates, particularly on 1 year deals

[bednobs]

thye do want savers - but you wouldn't expect them to have higher interest rates for savers than borrowers would you?

[sarah_louise]

The inter bank lending rate and the government lending rates are much higher so I would have thought it would be a good business plan to keep their savers instead.

[factor-fiction]

Base rates are 2% and are expected to fall further. The interbank LIBOR rate is under 3% and is falling. The banks will set savings rates at a level which allows them to attract sufficient funds from savers whilst making sure they make a profit between their lending rates and savings rates.
My tracker mortgage rate has fallen to 2.99% so whilst I'd love my bank to still pay me 6% on my savings I think I'm quite lucky to be getting 3.5%.
What rates are you looking for Sarah_louise, you can still get 4-5% which is pretty good in the circumstances.
And remember, inflation is forecast to fall from 4-5% to 1-2% very quickly.

[sarah_louise]

Thank you factor 30.
It just seems to me that myCash ISA s are below the real inflation rate.
Other Rates are after inflation rate and income tax are losing.
I was with Icelandic banks so still feeling a bit fragile

[sarah_louise]

Northern Rock, Britannia and Bradford Bingley keep going down almost every email shich are my other savings

[dasherman]

Many small building societies often offer the best rates over time because they're still mutual,have no shareholders and are only allowed to borrow upto 50% of their lending portfolio.

I have a cash ISA with Kent Reliance BS whose rates have consistently been just below the headline grabbing rates for the last few years,currently 4.01% I think.