Lee Byers Update: Interest Rates are Rising & Brits Save in Sterling
Having only just finished penning a piece about how rubbish offshore interest rates are at the moment, I'm going to have to eat my words it seems, as certain offshore banks are pushing the boat out and offering their loyal savers more. The offshore arm of the Co-operative has just pushed up its fixed rates for example, and Anglo Irish has adjusted its offerings in a positive direction too.
You may be confused as to why they would feel the need to bother – after all, base rates haven't moved in months, and since when do banks give away more than they have to? However, according to the Telegraph this can be explained away as follows: "fixed rates are governed by what the money markets expect to happen to interest rates in the future. Banks buy fixed rate money and sell it on to their savers as fixed rate accounts - after taking off their margin. This margin can be elastic and this could also account for fixed rates moving."
So savers can get more for their money right now, but those with mortgages may need to heed this warning and be prepared for an increase in their interest rates in the near term too. Meanwhile, a survey by Lloyds International has revealed that of those expatriates with money saved and invested, the vast majority keep their holdings in sterling. They suggest this has something to do with Britons being savvy and well aware that the British economy is bouncing back. We would like to suggest that it has more to do with expats not knowing that better options exist.
Other than a politician, there's nothing like a bank for putting a positive spin on less than ideal news. The fact that Lloyds International's latest expatriate survey has revealed that almost 80% of British expat savers keep their money in sterling is not good news – and yet here's how they've spun it: -
"The stabilisation and recapitalisation of the UK banking system is clearly at the heart of this. The expat community has quite a unique insight into the UK economy as they have one foot in the camp of their new country of residence but also keep very close ties with the UK. Considering this, it is encouraging that our customers and Brits living abroad are backing sterling again."
Do bankers really believe that Brits abroad believe the banks have stabilised and recapitalised? Do bankers really believe that the vast majority of expats have the time, energy or interest to move their money between currencies to capitalise on miniscule movements in one currency's favour?
The reality is we intrinsically ‘trust' the currency we've been brought up with only because that's the currency we know best. Furthermore, when looking around for savings and investment solutions, most expats only know to look onshore back in their old home nation – because there they know how the financial system works, which compensation schemes are in place, who the big banking players are, and they are familiar with the forms they have to fill in and the data they have to supply to get an account set up.
What's more, you wouldn't believe the number of enquiries we get every single day from soon to be expats wanting to get their money in order before they go. We're not financial advisers, therefore sadly we are not in a position to offer them any advice – but what is clear is that they will find a way to manage their money before they move, and in most cases that will probably be by putting it in a low interest returning savings account in an onshore British bank.
What we can say – and what we want to say to Britons living abroad or planning on expatriating - is that the offshore world of savings and investment solutions is open to you. Sterling is not always best, onshore is not always ideal and you really need to take as broad a view with your finances as you have already taken with your other major life choices – i.e., look around overseas, abroad and offshore to see where the best deals are for your money!
Expatriates and would-be expats need qualified, professional and regulated advice when it comes to their finances – and they should not be swayed by the hype and bluff of banks offering less than ideal returns – onshore or offshore!
We urge expats to look after their financial status because they are often in a position to make far more of their money whilst they are living abroad.
Finally, whilst the aforementioned Co-operative and Anglo Irish banks have improved their offerings, there is still a very long way for all banks to go in terms of the returns they offer savers. Instead of offering short-term headline rates, reward more for loyalty. It is SO simple - and yet do they bankers listen to what their customers want? No!
You may be confused as to why they would feel the need to bother – after all, base rates haven't moved in months, and since when do banks give away more than they have to? However, according to the Telegraph this can be explained away as follows: "fixed rates are governed by what the money markets expect to happen to interest rates in the future. Banks buy fixed rate money and sell it on to their savers as fixed rate accounts - after taking off their margin. This margin can be elastic and this could also account for fixed rates moving."
So savers can get more for their money right now, but those with mortgages may need to heed this warning and be prepared for an increase in their interest rates in the near term too. Meanwhile, a survey by Lloyds International has revealed that of those expatriates with money saved and invested, the vast majority keep their holdings in sterling. They suggest this has something to do with Britons being savvy and well aware that the British economy is bouncing back. We would like to suggest that it has more to do with expats not knowing that better options exist.
Other than a politician, there's nothing like a bank for putting a positive spin on less than ideal news. The fact that Lloyds International's latest expatriate survey has revealed that almost 80% of British expat savers keep their money in sterling is not good news – and yet here's how they've spun it: -
"The stabilisation and recapitalisation of the UK banking system is clearly at the heart of this. The expat community has quite a unique insight into the UK economy as they have one foot in the camp of their new country of residence but also keep very close ties with the UK. Considering this, it is encouraging that our customers and Brits living abroad are backing sterling again."
Do bankers really believe that Brits abroad believe the banks have stabilised and recapitalised? Do bankers really believe that the vast majority of expats have the time, energy or interest to move their money between currencies to capitalise on miniscule movements in one currency's favour?
The reality is we intrinsically ‘trust' the currency we've been brought up with only because that's the currency we know best. Furthermore, when looking around for savings and investment solutions, most expats only know to look onshore back in their old home nation – because there they know how the financial system works, which compensation schemes are in place, who the big banking players are, and they are familiar with the forms they have to fill in and the data they have to supply to get an account set up.
What's more, you wouldn't believe the number of enquiries we get every single day from soon to be expats wanting to get their money in order before they go. We're not financial advisers, therefore sadly we are not in a position to offer them any advice – but what is clear is that they will find a way to manage their money before they move, and in most cases that will probably be by putting it in a low interest returning savings account in an onshore British bank.
What we can say – and what we want to say to Britons living abroad or planning on expatriating - is that the offshore world of savings and investment solutions is open to you. Sterling is not always best, onshore is not always ideal and you really need to take as broad a view with your finances as you have already taken with your other major life choices – i.e., look around overseas, abroad and offshore to see where the best deals are for your money!
Expatriates and would-be expats need qualified, professional and regulated advice when it comes to their finances – and they should not be swayed by the hype and bluff of banks offering less than ideal returns – onshore or offshore!
We urge expats to look after their financial status because they are often in a position to make far more of their money whilst they are living abroad.
Finally, whilst the aforementioned Co-operative and Anglo Irish banks have improved their offerings, there is still a very long way for all banks to go in terms of the returns they offer savers. Instead of offering short-term headline rates, reward more for loyalty. It is SO simple - and yet do they bankers listen to what their customers want? No!
