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Expat savers still suffering from UK government policies
| Published: | 6 Feb at 6 PM |
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Five years after the start of the world financial crisis, expat savers with offshore accounts are still suffering low interest rates due to government strategies to give banks cheap money.
Unless a miracle occurs, next month expat savers will have seen the real value of their savings fall for five years in succession due to the base rate’s record low of 0.5 per cent. The news gets worse, as the markets are now suggesting that the base rate is unlikely to rise until the second half of 2014.
Nowadays, making money on an investment is almost impossible, taking into account that, in the UK and in the majority of other countries favoured by expats, the cost of living has been and still is rising. Savings rates are suffering from the UK government’s introduction of the Funding for Lending scheme, whereby banks are lent huge sums at negligible interest rates to pass on as mortgages.
Putting aside the fact that, in the UK, it’s more difficult than ever before to get a mortgage, plus the suspicion that casino techniques are being applied to the almost-free government loans, all the above factors form a toxic mix for expat savers. The truth is that banks don’t need your savings now due to cheap money from the government.
Expats are facing a double whammy of interest rates at no more than around two per cent and the diminishing number of offshore banks willing to provide saving accounts. The best rate at present is 2.35 per cent fixed for 2, 3, or 5 years, although that is the gross rate and AERs are slightly lower due to frequent payments of interest.
Even this may not last long, as most offshore banks are entering a round of savings rate cuts. Rates on fixed term savings accounts would seem to be heading to just above one per cent.
Unless a miracle occurs, next month expat savers will have seen the real value of their savings fall for five years in succession due to the base rate’s record low of 0.5 per cent. The news gets worse, as the markets are now suggesting that the base rate is unlikely to rise until the second half of 2014.
Nowadays, making money on an investment is almost impossible, taking into account that, in the UK and in the majority of other countries favoured by expats, the cost of living has been and still is rising. Savings rates are suffering from the UK government’s introduction of the Funding for Lending scheme, whereby banks are lent huge sums at negligible interest rates to pass on as mortgages.
Putting aside the fact that, in the UK, it’s more difficult than ever before to get a mortgage, plus the suspicion that casino techniques are being applied to the almost-free government loans, all the above factors form a toxic mix for expat savers. The truth is that banks don’t need your savings now due to cheap money from the government.
Expats are facing a double whammy of interest rates at no more than around two per cent and the diminishing number of offshore banks willing to provide saving accounts. The best rate at present is 2.35 per cent fixed for 2, 3, or 5 years, although that is the gross rate and AERs are slightly lower due to frequent payments of interest.
Even this may not last long, as most offshore banks are entering a round of savings rate cuts. Rates on fixed term savings accounts would seem to be heading to just above one per cent.
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