Start saving now ahead of rate rises: Lovatt

Mortgage borrowers should start to put money away to help in the event of anticipated rate rises, Neil Lovatt, director at Scottish Friendly has said.

Mr Lovatt said although the UK was showing positive growth signs, real wage inflation was still low, and if the Bank of England decided to start hiking rates, people would need to start saving now to ensure they could keep up repayments on their houses.

He said: “There will be millions of savers out there who will feel they are not getting the best rates on their savings because of the fragility of the current political landscape.

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“The eurozone is one of Britain’s biggest trading partners, and as such, fears over a fresh crisis on the continent and how that might affect the UK economy is probably a leading consideration in the Bank of England’s decision.

“When interest rates do rise, those with a mortgage should make hay while the sun shines for them and build up a cushion of savings to draw on if their mortgage repayments start to rise.”

Adviser view

Sue Hannums, co-founder of advice website, said there was an issue with savers not being able to get competitive rates on their cash savings and Isas.

She said: “Most of the rates news in recent weeks has revolved around product withdrawals and lower rates being offered by providers. There have been a few examples of providers going against this trend, such as an innovative launch by The Family Building Society, which offers savers an alternative to some of the paltry interest rates on offer at the moment.

“We are still waiting for providers to bring out better deals soon, so that there is more competition in the market.”