Leeds Building Society scraps its 5% interest rate best buy

One UK provider of personal and business bank accounts recently scrapped its 5 per cent interest rate best buy, leaving harried savers once more in the lurch as a result, experts say.

With the five year fixed rate bond offering from Leeds Building Society no longer available, Saga’s 4.65 per cent saver, which is only available to those over the age of 50, now moves into the top spot for taxable savings accounts.  With industry experts now expecting the Bank of England’s Monetary Policy Commitee to not raise the nation’s base rate above its current low of 0.5 per cent, savers have had to weather the storm as a result.

Many British financial service providers have reduced their rates recently, such as Birmingham Midshires and Yorkshire Building Society, which both cut 0.15 percentage points off its five and two-year offerings.  Another building society continued the trend recently, as West Bromwich BS shelving its 3.55 per cent one year fix.

The average return on fixed rate bonds has been declining steadily since past may as providers switch their focus to easy access savers in a bid to drive deposits.  The average five-year fix paid 4.34 per cent in May, but now stands at only 3.96 per cent, according to research figures.

These figures only worsen when one turns back the clock to examine the average payout from before the credit crunch.  In November of 2008, savers could easily find a deal that returned 7.1 per cent on their deposits.

Savers are in for even more pain, said one banking expert.  The past two and a half years have been exceedingly rough, the expert added, but things are unlikely to improve for them over the next 12 months at least.

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