Battle for savers money rages

Janet Cane, savings analyst at Moneyfacts.co.uk, comments: "Many providers have realised that there is no more new money in the market and that the only way to increase their balance sheet is to tempt savers' money from their competitors.

"The continuing deterioration of the mortgage market which has left many lenders struggling to obtain funds on the money markets. The savings market in comparison is flourishing thanks to some of the highest levels of interest rates on savings accounts seen in years, particularly compared to times when base rate was at the same level.

"In the last month the highest rates on offer in the best buy charts have started to recede slightly but some providers are still launching products with extremely competitive rates.

"BMW Savings, Kent Reliance BS and Scottish BS have all launched new ISAs paying increased rates on the higher tiers to encourage savers to transfer in their existing ISA allowances from other institutions.

"Disappointing half-year profits from the banking sector for 2008 are forcing many providers to look for innovative ways to increase their balance sheets - which will be welcome news to savers."