November savers deposit £2.35 billion with building societies

by Gill Montia

Story link: November savers deposit £2.35 billion with building societies

Deposits made into building societies totalled £2.35 billion in November.

The amount is the third-highest on record and reflects savers’ preferences for a “safe-haven investment” following the Northern Rock crisis, falling share prices and talk of a recession.

November’s net figure of £2.35 billion is almost three times the £848m saved during the same month in 2006.

September and October of this year were also record months meaning that in the past three months, the figure for new deposits is close to the total amount of cash paid into building society accounts during the whole of 2006.

Interest rates are attractive, with some savings accounts now paying between 6% and 7%, and these levels are likely to be maintained.

Banks remain reluctant to lend to each other and this means that most financial institutions are keen to attract more deposits and boost their reserves.

Building societies have a strong presence in savings “best buy” tables: Newcastle building society’s Internet savings account pays 6.43%; Saffron Building Society’s mini cash Isa has a rate of 6.3%.

Higher rates are available with regular savings accounts: the Skipton and Britannia building societies are paying 7.55% and 7.5% respectively.

According to Adrian Coles, director general of the Building Societies’ Association, the deposits made during November will include money withdrawn from Northern Rock by worried customers but he adds that: “A perception of a possible change in the economic environment may also mean that greater attention is being given to savings these days.”