Mortgage lenders try and pull in retail deposits

Mortgage lenders across the UK are trying to pull in deposits from savers after facing difficulties with borrowing money in the short term wholesale market.


In order to aid funding through retail deposits mortgage lenders have been offering some excellent rates of interest in order to tempt savers into increasing deposits. Until recently Guaranteed Income Bonds have led the market, but now a number of lenders are offering new bonds that offer better returns.

The best rate on a Guaranteed Income Bond at present is 4.77% for a one year fixed rate bond. However, the Nationwide has now launched a number of fixed rate bonds that pay up to 6.5%. Some of the bonds are available to existing accountholders and those that have been with the bank for three years, whereas others are available to new and existing customers. Bradford and Bingley has also launched two Internet e-bonds, which offer similar rates.

Bradford and Bingley also offers another bond for those without Internet access, and this pays 6.40% gross. Birmingham Midshires is also offering an Internet bond with an interest rate of 6.86% gross, and this is a one year bond. Sage and Icesave are also offering bonds with similar rates. According to reports Skipton offers a bond with 7.75%. However, this is not a fixed rate but savers are locked into the bond for a year.

Savers that want to take advantage of lenders’ need to encourage savers to make deposits should make sure that they compare different products from a range of lenders, as there are different rates and products to suit different needs.

Mark Wright
8th November 2007

Tags: Sage, Mortgages, savings, Birmingham, interest rates