There was fresh criticism of the Government’s Funding for Lending Scheme on Monday after new figures revealed that the interest paid on popular fixed-rate bonds has plummeted.
New analysis by Moneyfacts revealed that anyone with cash maturing in a five-year bond this month will get only around half as much interest in a new five-year bond.
But even the rates on one-year bonds have plunged 40 per cent since the introduction of the Coalition’s scheme, which gave lenders cheap money to offer to homeowners and small businesses.
The move has been brilliant for borrowers but disastrous for savers as banks now have no need to offer decent rates.
A year ago when Funding for Lending was launched average one-year bond rates paid 2.64 per cent – now they’ve fallen to a desultory 1.59 per cent.
But top Tories are refusing to acknowledge the devastating effect their housing policy is having on millions of savers.
“Sadly, getting the architects of the Funding for Lending Scheme to acknowledge any culpability for the devastating situation savers are left with is about as probable as them suggesting a solution,” said Sylvia Waycot, editor at Moneyfacts.
She warned that many savers are now in danger of rolling their cash over into a new fixed-rate bond and ending up with an even worse rate, making savers’ apathy “doubly dangerous”.