Savings see a marked rise as debt repayments slow

Brits made a concerted effort with their savings in the first quarter of this year, with a notable rise in the level of money being squirreled away, the highest increase since Q2 2009, according to research from unbiased.co.uk, the professional advice website. At the same time, the rate of paying back our debts has slowed from a year ago (£1.8 billion in Q1 compared to £2.4 billion in Q4 2010).

These figures are part of unbiased.co.uk's Savings Brake research, which reveals a quarter by quarter ratio changes of how much we are borrowing (including unsecured borrowing and equity release but excluding mortgages) compared with how much we are saving.

While it's good news that debt repayments still outweigh current borrowings, a phenomenon first seen back in Q3 of 2008, the report reveals the amount we pay back on our debts is the lowest since Q3 2009.

Commenting on the figures Karen Barrett, Chief Executive of unbiased.co.uk, said "It is extremely encouraging to see the level of savings increase at the start of this year and it's certainly an interesting turnaround from the previous quarter.  We have to ask why people are saving more but paying off less debt?  It seems that a rainy day fund is proving more essential now than it has ever been - with rising inflation, a looming interest rate rise and more job losses it's no surprise that people are concerned and comforted by having cash to hand and accessible.  Hopefully this is not just a blip we are seeing in savings fuelled by recent redundancy payments and low consumer confidence.  

"An IFA can advise you on striking the best balance between borrowing and saving, as well as looking at your overall financial position and recommending products from the whole of the market.  You can carry out a free and confidential search to find an independent financial adviser near you by visiting unbiased.co.uk."