Savers capitalising on the debts of others

Savers are profiting at the expense of borrowers in the now cut-throat financial landscape of Britain.

Research by price comparison site moneysupermarket.com shows savings and loan rates both consistently climbing since July despite the Bank of England making two interest rate cuts since then.

The rapidly changing monetary landscape is great news for wealthy savers and a disaster for peoplewho use loans to help manage their finances.

Tim Moss, head of loans at price comparison site moneysupermarket.com, said: "Poorer Brits are now paying the price for banks' poor lending decisions of the recent past. Their lending mistakes in the US, in particular, are now hitting people here who can least afford it.

"Lenders are ramping up their rates to claw back profits. For every happy saver in Britain, there is a now a disappointed borrower."

The figures make good and bad reading in equal measure for Brits. The best loans have gone from an average of 6.56 per cent in September to 7.34 per cent now – despite official interest rates falling by 0.50 per cent in that period. It means the best loans average a stark 2.09 per cent above the base rate – up from 0.81 above the base rate in September.

Kevin Mountford, head of savings and current accounts at moneysupermarket.com, said: "Savers though, back in July, were barely getting any return above the base rate, but now they are consistently seeing rates one per cent or more above the Bank of England's figure.

"Add to that, the current accounts from Alliance & Leicester and Abbey paying eight per cent or more and savers have never had it so good.

"Banks know they need to increase their level of savings so they are now fighting for new customers."