3 March 2009
Rate Cut not welcomed by Building Societies, says Saffron's Chief Executive.
A Bank of England decision to cut interest rates again this week would not be welcomed by building societies, according to Saffron Building Society, the regional Building Society serving East Anglia.
With base rate currently at 1%, all those connected to the savings and mortgage markets have been affected; over the last 6 months, building societies report:
Problems for savers – as the income earned from savings has declined substantially.
Problems for borrowers – as lenders are forced to cut back on lending as their savings inflow declines.
Problems for financial providers – such low interest rates result in declining profit margins, which restricts lending ability for banks and building societies.
Ahead of the MPC's decision on Thursday, Saffron's Chief Executive Andy Golding said:
"As a local mutual, we see at first hand the difficulties that our members are experiencing as a result of falling interest rates. 90% of our members are savers; a significant proportion of them are drawing a pension and dependent on the interest of their savings in order to maintain their standard of living. With base rate at 1%, their savings are not delivering the lifeline that they need. Another rate cut would damage these savers even further."
"In times like these, it falls to mutuals such as Saffron to try and protect members from low savings rates and the struggle to find a new mortgage as lending tightens. As such, we have launched a number of competitive savings accounts to reward saving; and fixed mortgage deals exclusively for current customers; along with up to 100% LTV on remortgaging if their property has been hit by falling house prices."
"This customer-focused thinking has put building societies ahead of banks in terms of customer satisfaction, value for money and trust, as shown by a recent BSA survey*. If the Bank of England do decide to reduce rates, building societies will continue to put their members first and attempt to address their problems."
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