UK Bank Interest Rates
Aug 19th 2010, 8:18 am
#1
Lost in BE Cyberspace
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Joined: Jun 2008
Location: San Francisco Bay Area
Posts: 10,678
UK Bank Interest Rates
I noticed that several UK banks pay as much as 5.5% interest rates on deposits. I thought the UK has a discount rate of 0.5% which is only a little more than then US and you are lucky to find any bank in the US paying more than about 1.25%.
http://www.rate.co.uk/savings/index.html
That doesn't seem to make much sense since the 10 year gilt is only paying 3.02% and the 30 year gilt is paying 4.05%. What am I missing?
http://markets.ft.com/markets/bonds.asp
With banks paying that much on deposits, how are banks providing low cost home loans?
http://www.rate.co.uk/savings/index.html
That doesn't seem to make much sense since the 10 year gilt is only paying 3.02% and the 30 year gilt is paying 4.05%. What am I missing?
http://markets.ft.com/markets/bonds.asp
With banks paying that much on deposits, how are banks providing low cost home loans?
Aug 19th 2010, 12:06 pm
#2
Septic Sprout
Joined: Aug 2004
Location: Shanghai
Posts: 7,993
Re: UK Bank Interest Rates
I noticed that several UK banks pay as much as 5.5% interest rates on deposits. I thought the UK has a discount rate of 0.5% which is only a little more than then US and you are lucky to find any bank in the US paying more than about 1.25%.
http://www.rate.co.uk/savings/index.html
That doesn't seem to make much sense since the 10 year gilt is only paying 3.02% and the 30 year gilt is paying 4.05%. What am I missing?
http://markets.ft.com/markets/bonds.asp
With banks paying that much on deposits, how are banks providing low cost home loans?
http://www.rate.co.uk/savings/index.html
That doesn't seem to make much sense since the 10 year gilt is only paying 3.02% and the 30 year gilt is paying 4.05%. What am I missing?
http://markets.ft.com/markets/bonds.asp
With banks paying that much on deposits, how are banks providing low cost home loans?
Aug 19th 2010, 2:22 pm
#3
BE Forum Addict
Joined: Aug 2004
Location: Tampa, FL
Posts: 3,338
Re: UK Bank Interest Rates
I think that website you are using is misleading. I had a quick look on the company websites for some of those top offers...didn't spend much time but for what you would term as an instant access, no penalty saving account, those rates are nowhere to be found. Only the 3 and 5 year ISA's seem to be approaching the advertised rates. If those deals are there, they are tied up with terms and conditions or are otherwise not conventional fixed interest savings accounts.
That said, the savings rates are a little higher than here in the US...but even then, you have to read into it. For instance, I did see that Scottish Widows appear to be offering 2.7% on their internet saver.....but it says that rate includes a bonus of 0.69% for the first 12 months, so actual rate is 2.01%..... Seems like the UK banks are getting into US style small print and bait'n'switch tactics
That said, the savings rates are a little higher than here in the US...but even then, you have to read into it. For instance, I did see that Scottish Widows appear to be offering 2.7% on their internet saver.....but it says that rate includes a bonus of 0.69% for the first 12 months, so actual rate is 2.01%..... Seems like the UK banks are getting into US style small print and bait'n'switch tactics
Aug 19th 2010, 6:00 pm
#4
Ping-ponger
Joined: Jul 2002
Location: Dreich Alba
Posts: 12,013
Re: UK Bank Interest Rates
I think that website you are using is misleading. I had a quick look on the company websites for some of those top offers...didn't spend much time but for what you would term as an instant access, no penalty saving account, those rates are nowhere to be found. Only the 3 and 5 year ISA's seem to be approaching the advertised rates. If those deals are there, they are tied up with terms and conditions or are otherwise not conventional fixed interest savings accounts.
That said, the savings rates are a little higher than here in the US...but even then, you have to read into it. For instance, I did see that Scottish Widows appear to be offering 2.7% on their internet saver.....but it says that rate includes a bonus of 0.69% for the first 12 months, so actual rate is 2.01%..... Seems like the UK banks are getting into US style small print and bait'n'switch tactics
That said, the savings rates are a little higher than here in the US...but even then, you have to read into it. For instance, I did see that Scottish Widows appear to be offering 2.7% on their internet saver.....but it says that rate includes a bonus of 0.69% for the first 12 months, so actual rate is 2.01%..... Seems like the UK banks are getting into US style small print and bait'n'switch tactics
To get a decent rate, you have to lock in for a period, a bit like CD's in the States.
Aug 20th 2010, 7:39 am
#5
Lost in BE Cyberspace
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Joined: Jun 2008
Location: San Francisco Bay Area
Posts: 10,678
Re: UK Bank Interest Rates
I always thought that US large banks were much too large and therefore could manipulate the market but I didn't realize they were small compared to many European banks.
For example JP Morgan/Chase (the US largest bank) is smaller than UK banks Royal Bank of Scotland, Barclays, and LLoyds as well as French banks BNP Paribas and Credit Agricole.
http://www.bankersalmanac.com/addcon...-rankings.aspx
In fact JP Morgan/Chase and Wells Fargo were not even ranked in the top 50 for the year 2008. It wasn't until JP Morgan/Chase purchased Bear Stearns and Washington Mutual and Wells Fargo purchased Wachovia that they moved into the top 50 in 2009.
For example JP Morgan/Chase (the US largest bank) is smaller than UK banks Royal Bank of Scotland, Barclays, and LLoyds as well as French banks BNP Paribas and Credit Agricole.
http://www.bankersalmanac.com/addcon...-rankings.aspx
In fact JP Morgan/Chase and Wells Fargo were not even ranked in the top 50 for the year 2008. It wasn't until JP Morgan/Chase purchased Bear Stearns and Washington Mutual and Wells Fargo purchased Wachovia that they moved into the top 50 in 2009.
