Protect and survive in the global meltdown

Amid all the turmoil, James Daley assesses the issues for UK savers, investors and homeowners

British stock markets suffered their worst week on record over the past five days, finishing yesterday evening down more than 20 per cent from the levels at which they opened on Monday morning. Even the Government's £50bn bank rescue package, and a co-ordinated 0.5 percentage point interest rate cut by the British, European and US central banks, failed to stem the panic.

While the turbulent markets have wiped billions of pounds off investors' pensions and investments, it's not been all bad news for savers and borrowers. Here, we take a look at how the events of the last week may have affected you.


The Bank of England's base rate cut on Wednesday was great news for existing borrowers with tracker mortgages – rates on these loans were immediately cut by 0.5 percentage points. For someone with a £200,000 mortgage, that represents a saving of £1,000 a year. Unfortunately, those people with discounted mortgages, which are tied to lenders' standard variable rates (SVRs), may not have felt the benefit. David Holingworth of London & Country mortgages, the fee-free broker, said that banks such as Halifax, Royal Bank of Scotland, Woolwich and First Direct have cut their SVRs by 0.5 percentage points. Other big lenders such as Nationwide and Abbey, however, have yet to pass on the cut to borrowers.

For people looking for new mortgages, rates are not getting any cheaper, either. Abbey withdrew its tracker mortgages on Thursday, and replaced them with rates that are 0.5 percentage points higher, relative to the base rate. Other lenders are believed to be considering raising their tracker rates. Hollingworth said that borrowers who are thinking of taking out a tracker mortgage should move quickly. Meanwhile, fixed rates are starting to look slightly better value – but with base rates expected to fall further, trackers are more popular.

As ever, you'll need a deposit of at least 5 per cent – or much more if you want to catch the most competitive rates. You'll also need a clean credit history.


Some banks were quick to use this week's base rate cut as an excuse to cut their savings rates. National Savings & Investments, for example, cut the rate on its direct ISA by 0.5 percentage points. Michelle Slade, of the comparison site, said that several other companies pulled their most competitive fixed-rate savings bonds – including the AA, which had one of the best rates of more than 7.2 per cent.

With capital markets still jammed up, however, most banks are still keen to attract new deposits, and have kept their best rates. Bradford & Bingley, whose savings business is now owned by Banco Santander, offers one of the best instant-access accounts, paying 6.51 per cent – more than 2 percentage points above base rate. And if you're in the market for a one-year fixed-rate bond, there are still accounts paying over 7 per cent, from banks such as Anglo-Irish, which has the full backing of the Irish government.

As long as Libor – the rates at which banks lend to each other – remains well above the base rate, then it's likely that savings rates will remain high, too.


The FTSE 100 fell more than 1,000 points this week, starting off at just below 5,000 and finishing down below 4,000, wiping 20 per cent off people's pensions and investments in just a few days.

The sharp falls prompted calls from the shadow work and pensions secretary Chris Grayling to ask the Government to suspend the obligation for pensioners to buy an annuity at the age of 75, and the Chancellor, Alistair Darling, is believed to be considering this.

Nevertheless, many professional investors are claiming that we are close to the bottom of the market. In an interview this week, Neil Woodford of Invesco Perpetual, one of the UK's most respected fund managers, became the latest high-profile investor to claim that markets were approaching a floor.

Most important is that investors hold their nerve. Panicking and selling holdings now will only crystalise losses at their lowest point. As long as your pension fund and investments are well-diversified, financial advisers believe that the best course of action is to sit tight and wait for the storm to pass. Drip feeding savings into the market every month is a good way to take advantage of these cheap valuations. To find an independent financial adviser in your area, visit


British house prices recorded their biggest annual drop in more than 30 years over the 12 months to the end of September. According to new figures from Halifax, house prices were down 13.4 per cent in September, compared to the same month last year, having fallen 1.3 per cent that month alone. The average UK house price is now £172,108, close to the levels seen at the start of 2006.

Although the Government last month raised the 1 per cent stamp duty threshold from £125,000 to £175,000 until September 2009, the downward pressures on the housing market have far outweighed any positive effect that the change may have had. Mortgage approvals are down 70 per cent year-on-year, and this would indicate that the slump in the housing market still may have some way to go. If you're thinking of buying, it may be worth waiting.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Lucerne’s Hotel Château Gütsch, one of the lots in our Homeless Veterans appeal charity auction
charity appeal
Raheem Sterling of Liverpool celebrates scoring the opening goal
footballLIVE: Follow all the latest from tonight's Capital One quarter-finals
Life and Style
A woman walks by a pandal art installation entitled 'Mars Mission' with the figure of an astronaut during the Durga Puja festival in Calcutta, India
techHow we’ll investigate the existence of, and maybe move in with, our alien neighbours
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France

Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt

Nabil Bentaleb (centre) celebrates putting Tottenham ahead
footballTottenham 4 Newcastle 0: Pochettino has Spurs fans dreaming of Wembley final
Arts and Entertainment
The Apprentice candidates Roisin Hogan, Solomon Akhtar, Mark Wright, Bianca Miller, Daniel Lassman
tvReview: But which contestants got the boot?
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
Arts and Entertainment
Sir Ian McKellen tempts the Cookie Monster
tvSir Ian McKellen joins the Cookie Monster for a lesson on temptation
Tourists bask in the sun beneath the skyscrapers of Dubai
travelBritish embassy uses social media campaign to issue travel advice for festive holiday-makers in UAE
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

    £40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

    Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

    £45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

    Ashdown Group: Java Developer - North West London - £47,000 + bonus + benefits

    £40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

    Selby Jennings: Corporate Communications & Marketing Specialist – Geneva

    120,000 - 150,000 chf + bonus: Selby Jennings: A leading Swiss Private Banking...

    Day In a Page

    Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

    Jeb Bush vs Hillary Clinton

    Karen Tumulty explores the power dynamics of the two first families
    Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

    Scandi crush: Stockholm is rivalling Silicon Valley

    Th Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
    Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

    Crucified Santa: Urban myth refuses to die

    The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
    La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

    Deaf community outraged by La Famille Bélier

    The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
    Calls for a military mental health 'quality mark'

    Homeless Veterans campaign

    Expert calls for military mental health 'quality mark'
    Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

    Meet Racton Man

    Analysis shows famous skeleton was a 6ft Bronze Age superman
    Garden Bridge: St Paul’s adds to £175m project’s troubled waters

    Garden Bridge

    St Paul’s adds to £175m project’s troubled waters
    Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

    Stuff your own Christmas mouse ornament

    An evening class in taxidermy with a festive feel
    Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

    Joint Enterprise

    The legal doctrine which critics say has caused hundreds of miscarriages of justice
    Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

    Freud and Eros

    Love, Lust and Longing at the Freud Museum
    France's Front National and the fear of a ‘gay lobby’ around Marine Le Pen

    Front National fear of ‘gay lobby’

    Marine Le Pen appoints Sébastien Chenu as cultural adviser
    'Enhanced interrogation techniques?' When language is distorted to hide state crimes

    Robert Fisk on the CIA 'torture report'

    Once again language is distorted in order to hide US state wrongdoing
    Radio 1’s new chart host must placate the Swifties and Azaleans

    Radio 1 to mediate between the Swifties and Azaleans

    New chart host Clara Amfo must placate pop's fan armies
    Homeless Veterans appeal: 'It's life, and not the Forces, that gets you'

    Homeless Veterans appeal: 'It's life, and not the Forces, that gets you'

    The head of Veterans Aid on how his charity is changing perceptions of ex-servicemen and women in need
    Torture: It didn't work then, it doesn't work now

    Torture: It didn't work then, it doesn't work now

    Its use is always wrong and, despite CIA justifications post 9/11, the information obtained from it is invariably tainted, argues Patrick Cockburn