Expat savers to lose if interest rates fall further

Published:  20 Nov at 6 PM
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Money markets are predicting a further fall in the Bank of England base rate by early summer 2013, threatening to cut expat saver rates from their already low point.

Record low fixed rates for savers have reflected the low base rate for over three and a half years, with expat savers relying on interest to boost their income hard hit.

International money markets suggest that the base rate will drop to 0.25 per cent from its present 0.5 per cent and will remain at that point until at least 2015. Worse still, the markets predict a rise to 1 per cent isn’t likely until 2018.

If the markets have it right, those on fixed rates nearing their end will get an even smaller percentage when they renegotiate. At present, many expats on two-year fixed rates are receiving less that they would on the best notice or easy-access savings accounts.

Since early summer, even five-year fixed rate offerings have dropped by several percentage points with, for example, Lloyds TSB International falling from 4.5 per cent to 2.2 per cent, even although the base rate has remained unchanged during the period. Combined with soaring inflation in most of the countries favoured by expats, any further falls are bad news, especially for expat retirees looking to interest on their savings to top up their state pensions.
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