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The Shift in Bank of England Policies That Is Good News for Savers

Treasure chest

It seems that in every novel there is a villain and the same is often true in modern life. Sometimes, we are victims of circumstance, suffering from consequences which are completely out of our control and over which we have few options. In this tale, the villain, in a manner of speaking, has been the Bank of England, but most likely unintentionally. When, in August 2012, they launched their Funding for Lending scheme, they wanted to drag the UK’s housing market out of the doldrums. Their reasoning was that if consumers had access to inexpensive mortgages, they would be motivated to buy new homes. Well, all recent indicators point to the fact that they were absolutely right. The UK housing market has had a dramatic renaissance, bringing housing activity back to just about where it was before the housing bubble of 2008 collapsed. All this is excellent news for homebuyers, but the ones that paid the price, so to speak have been savers. The Law of Supply and Demand The problem, if you want to couch it that way, is the fact that the government scheme injected over £80 billion of capital into the mortgage markets. As a result, traditional ...

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