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Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Will Pensioner Bonds Election Bribe Lift General UK Savings Interest Rates from Catastrophic Lows?

Personal_Finance / Savings Accounts Feb 15, 2015 - 06:33 PM GMT

By: Nadeem_Walayat

Personal_Finance

The recent news for the extension of the Coalition Government's 4% Pensioner Bonds election bribe for a further 3 months to at least Mid May 2015 looks set to soak up at least £25 billion of the savings held by interest rate starved pensioners at an estimated cost to the tax payer of at least £1.2 billion. Whilst the bond is only open to the over 65's, nevertheless it will result in a flow of funds away from the commercial banks and to the government run NS&I that should prompt at least a limited rise in savings interest rates, especially for the directly competing fixed rate bonds such as the 3 and 4 year bonds that could now nudge above 3%.


UK Savings Catastrophe

The 4% Government bond may mark the start for the end or for a pause in Britain's savings catastrophe as a consequence of the banking crime syndicate suckling on the teat of the Bank of England for over 6 years now through a myriad of schemes (scams) that results in effectively providing the banks with unlimited funding that has resulted in the collapse of savings interest rates the latest phase of which began in May 2012 and has in large part been kept at sub inflation rates that amounts to systemic theft.

The table below illustrates the cash ISA rates offered by apparently the often reported on as best buy accounts of the Halifax mega-bank that in reality crashed in response to the Bank of England's Funding for Lending Scheme that started in July 2012.

Halifax ISA's May 2012 Sept 2012 Nov 2012 Mar 2013 May 2013 July 2013 Mar 2014 June 2014 Feb 2015 % Cut
Instant Access
3%
2.75%
2.35%
1.75%
1.35% 1.35% 1.5% 1.30% 1.05% -66%
1 Year Fix
2.25%
2.05%
2.05%
1.75% 1.75% 1.65% 1.5% 1.4% -38%
2 Year Fix
4.00%
3.25%
2.25%
2.5%
2.10% 2.10% 2.05% 1.8% 1.6% -60%
3 Year Fix
4.25%
3.75%
2.35%
3.00%
2.25% 2.25% 2.25% 2% 1.75% -59%
4 Year Fix
4.35%
3.80%
2.40%
3.05%
2.30% 2.30% 2.40% 2.10%   -52%
5 Year Fix
4.50%
4.15%
2.60%
3.10%
2.35% 2.35% 2.5% 2.20% 2% -56%

The table shows that the tax payer bailed out Halifax continues to across the board pay abysmally poor rates of interest that compare against average RPI inflation rate of 2.4% for 2014.

Therefore the Halifax, along with most banks should by May 2015 have at least marginally raised their savings interest rates from the current catastrophic lows. For instance the Halifax 5 year ISA awful rate of of 2% should be at least back to the marginally less awful rate of 2.2%.

Though the bankster crime syndicate of other countries such as that of Denmark are laying the ground work to start charging customers interest on funds deposited at their banks - NEGATIVE INTEREST RATES! Where banks go from real terms theft of customer deposits purchasing power to outright theft of funds on deposit.

Negative interest rates are as a direct consequence of central bank rampant money printing, flooding the financial system with free money that destroys purchasing power of currency, destroys the value of savings, destroys investment and instead encourages casino capitalism with borrowed free money that ofcourse stokes housing bubbles.

Pensioner Bonds Recap

15 Jan 2015 - New 4% Pensioner Bonds Election Bribe - Grab it While You Can

Election Bribe

As a comparison the best 1 year fixed rates average about 1.8% and the best 3 year fixed rates average about 2.4% gross!. So these bonds are paying 60% premium to the market rate, hence why they are an election bribe. Therefore the £10 billion tranche converts into a potential bribe of at least £500 million as the NS&I usually tends to under pay market rates.

Bond Details
  • For 65+ only
  • Invest between £500 to £10k
  • Interest is taxable.
  • 1 year pays 2.8% gross (2.24%net)
  • 3 year pays 4% gross (3.2% net)
  • Fixed rate term bonds

As mentioned earlier, if you miss applying for the current £10 billion offering then there is a better than 50% chance that the Government will make an additional tranche available later on as the purpose of these bonds is literally to BUY VOTES, especially as NS&I rates tend to be at the bottom end of the market i.e. the 5 year Issue 102 fixed rate bond carries a rate of 1.6% gross.

Savers What to do ?

In my opinion savers either continue to effectively hand over their hard earned cash to the banks to systematically siphon off through persistent loss of purchasing power or they look at alternative asset classes such as the UK housing market that is currently trundling along at an average annual percentage rate of THREE times the pittance that the likes of Halifax pays as covered at length in my UK Housing Market Ebook available for FREE DOWNLOAD (Only requirement is a valid email address).

Source and Comments: http://www.marketoracle.co.uk/Article49446.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2015 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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