…and the ugly
While this is certainly unwelcome news for those trying to save, the outlook isn’t promising either. When it came to the rate change decision, policymakers at the Monetary Policy Committee (MPC) voted unanimously on the decision, which could be a signal that further cuts, perhaps even taking the rate to 0%, could be on the way in the coming months. Indeed, minutes of the meeting, held on the 4th August, showed that some members were in favour of reducing Bank Rate further. There is a potential that the banks could be charging negative rates to those with money on deposit – effectively, this means the bank will charge you interest for looking after your money. The Royal Bank of Scotland is already charging a few business customers.
Meanwhile, Switzerland, Denmark and Sweden are all already experiencing negative bank interest rates. Alternative Bank Schweiz (ABS) was the first bank to pass on negative interest rates to customers in late 2015. Banks here may be more reluctant to do this and instead opt for account fees to cover their costs.
What is for sure, is that both the savings and mortgage markets will see a lot of change over the coming months, so if you’re looking for the best deals, it’s a good idea to keep an eye on comparethemarket.com.