Interest rates on all savings accounts are at
record-lows in the UK and are failing to entice customers despite improving
economic conditions. Growth has been slow across all savings accounts, apart
from ISAs, which have seen growth due to the upper limits being raised every
year since 2010, not because of attractive interest rates.
The central bank rate remaining so low has meant that
banks have had access to extremely cheap funds and therefore have not needed to
compete for savings accounts from consumers. This in turn has made borrowing
from banks cheaper, meaning taking on debt for high-value purchases or moving
house has been cheaper throughout the review period, so investing and paying
off debt has been more appealing than stashing cash away in savings accounts
Average pay, including bonuses, increased by 3.0% in
May to July 2015, compared to the same period in the previous year, which
marked the largest rise in six years. This, combined with record ow inflation –
hasn’t been above 0.1% since January 2015, and dropped back to -0.1% in
September 2015 – means that real wages have grown substantially throughout
2015, something not seen since before the financial crash. Furthermore, UK
unemployment fell to a seven-year low of 5.4% in the three months to August,
with 79,000 more people in work than the previous quarter.
Despite more people being in work, and those in work
seeing growth in real wages, people are saving a smaller percentage of their
wage than at any time since 2008. People generally became very wary of debt in
the immediate aftermath of the financial crash, which encouraged saving and saw
the saving rate rise to 11.4%. A recent surge in consumer confidence though,
has largely seen people lose that fear, as the rate plummeted to 4.6%, with
people looking towards spending more – spending on hotels and restaurants was
up 8% in 2015 up to October, for example – or paying off debt with higher
interest rates than savings accounts can offer.
The extremely uncompetitive savings account market,
in terms of interest rates, has clearly been a factor in the savings rate, as
consumers haven’t been tempted to lock money away.
Two million customers have switched current account
providers in the two years since the Payments Council Current Account Switch
Service for individuals, small companies and charities was introduced to make
the process easier. The scheme is also known as the 7-day switch aimed to
promote competition in the market and allow consumers more choice.
This suggests that despite record-low savings rates
being offered in a very uncompetitive market, banks can still attract customers
on mass with a relatively good offer. Santander has been a perfect example of
this in 2015, who despite charging GBP2.0 per month for its 123 account, has
attracted 98,400 new customers this year due to a more competitive interest
rates and cashback on household bills.
Interest rates on all savings accounts are at record
lows in the UK and are failing to entice customers, despite improving economic
conditions. Growth has been slow across all savings accounts, apart from ISAs,
which have seen growth due to the upper limits being raised every year since
2010, not because of attractive interest rates.
Scope
- This report provides market analysis, information and insights into the UK retail savings industry
- It provides a breakdown of the types of savings products offered in the UK
- It analyzes drivers and the outlook for the market
- It provides information on the main banks in the UK market
- It covers news and regulatory developments
- It forecasts the future of the retail savings industry in the UK over the next five years
Reasons to Buy
- Gain an understanding of the UK retail savings industry.
- See monthly and annual statistics on every aspect of the market, both in written form and shown in graphs and tables.
- Read analysis of the relevant market statistics, indicating what has been happening in the retail savings market, why it has been happening, and what to expect over the coming years.
- Read about all the economic factors impacting the industry.
- Read about how individual banks and building societies are affecting the market, in terms of market share and innovation.
Key Highlights
The outstanding balance of total deposits held by
households increased from GBP1.10 trillion at the end of 2010 to GBP1.28
trillion at the end of December 2014, an increase of 16.74% and a CAGR of
3.74%. The outstanding balance rose by a further 2.7% to GBP1.31 billion at the
end of July 2015, since the start of the year.
Spanning over 71 pages “Retail Savings in the UK - Key Trends and Opportunities
to 2019” report covers Executive Summary,
Introduction, Market Analysis, Consumers, Competitive Landscape, Market
Outlook, Regulation and Compliance, News, Deals, UK Retail Banks, Appendix.
Find more information Visit at: http://mrr.cm/ohU
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