Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 21/08/2019

Savers looking to deposit up to £85,000 have the peace of mind that their savings are protected by the Financial Services Compensation Scheme (FSCS), but for those looking to save over this amount, ensuring their savings are protected becomes more complicated. To help these savers ensure their money is protected, Moneyfacts.co.uk has looked at how to invest over £85,000 to get the best returns while also being FSCS-protected.

The British public are expected to spend over £2.6 billion on trips during the upcoming bank holiday weekend, research from American Express reveals.

According to the research, a fifth (20%) of British people are planning on taking a trip this weekend. Those going abroad will spend an average £280 each, while those taking a staycation will spend an average £235. Of this, both those going abroad and staying in the UK are expected to spend the most on accommodation, £70 and £65 respectively, followed by travel, and then meals and drink. Those who decide to stay at home during the long weekend are still expected to spend an average £76 each on extra activities, such as shopping (43%), eating out (39%) and going for drinks (38%).

More than half (64%) of workers aged 45 and over do not know how much they will need to save to afford a comfortable retirement, research by Aviva UK has found.

With the full new state pension currently valued at £168.80 per week, which adds up to a retirement income of £8,777.60 per year, it is important for workers to know how much they will need to personally save in order to supplement their state pension and enjoy a comfortable retirement.

Along with knowing how much they need to save, employees also need to know how much they have saved already, however Aviva UK’s research also found that 37% of employees have no idea of how much they have already saved for their pension. In addition to this, the research found that 26% do not know at what age they’ll be eligible for the state pension.

Lindsey Rix, managing director of savings and retirement at Aviva, said: “Millions of mid-life employees are flying blind, and fast, towards their retirement. At the same time, these employees are calling upon their employers for help.

“Without a clear picture of what they currently have saved or might need to save for a comfortable retirement, our findings show many UK employees are approaching retirement with their eyes closed – with no realistic idea of how near or far they are from their destination.

“As a first step, mid-life employees who are mystified by their pension savings should try to get a clear picture of what they have saved so far and how much of an income this can provide them with over the course of retirement. For some, this may be a pleasant surprise, while for others, it could be the wake-up call that’s needed to spur them to take action. People whose pensions are in need of a boost shouldn’t be disheartened, however, as it’s never too late to save.”

The average five-year fixed rate mortgage has fallen from 2.84% to 2.79% in the past three weeks, research from Moneyfacts.co.uk reveals.

The research also found that the difference between the average two and five-year fixed mortgage rates has reduced by 0.03% to 0.32% over the same period. These rate drops seem to be lenders responding to a fall in SWAP rates and passing on the reduction to consumers.

Last month saw 40% of savings providers cut or withdraw their fixed rate bonds, data from Moneyfacts UK Savings Trends Treasury Report has found.

The findings from the report, which is not yet published, will be unpleasant reading for savers, especially for long-term savers who have been hit particularly hard, with long-term rates seeing the biggest month-on-month drop since November 2016. In fact, during July, a third (33%) of providers adjusted their longer-term fixed bond range, but short-term savers were also hit, with a fifth (20%) of providers amending their one-year offerings.

Savings market analysis 

  April 2018 August 2018 July 2019 August 2019
Average one-year fixed rate bond 1.22% 1.32% 1.41% 1.37%
Average longer-term fixed rate bond* 1.69% 1.82% 1.78% 1.72%

*Longer-term fixed bonds are those with terms over 550 days. Source: Moneyfacts Treasury Reports

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “The cuts to fixed rate bonds are gaining momentum, so much so that returns are dropping to their lowest levels seen in at least twelve months. This will be disappointing news to the day-to-day saver, as providers are reacting swiftly to a shift in their market position.

“As our analysis shows, almost half of providers in the savings market withdrew or cut their fixed rate bonds throughout July, a large portion of which were from challenger banks and Islamic banks. The challenger brands still dominate the fixed rate bond market regardless, however if savers lock in today versus a month ago, they may well have missed the boat for a more generous return.

“Providers appear to be altering their market position not necessarily to deter savers, but to adjust their margins and close the gap between their competition during a period of economic uncertainty. Indeed, the re-pricing comes at a time when the savings market may be preparing for a drop in the Bank of England base rate, with the two-year SWAP rate - a key indicator - falling to its lowest point (0.67%) since September 2017 (0.54%).

“Savers would be wise to prepare themselves for possible further falls in fixed rates as market influences take their toll, so if they are looking to lock away their cash, speed is of the essence. The same speed is crucial for savings providers to have an opportunity to adjust their rates and retain a decent market position to help gain deposits to fund their future lending - rather than pulling a deal entirely due to demand.”

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