30th March 2015
More than 2,000 homeowners are stashing away an average of £16,286, according to research commissioned by specialist buy-to-let peer-to-peer platform Landbay.
The findings of the analysis which was carried out by YouGov, show 23% of those surveyed have £25,000 or more in cash savings accounts, while 15% having more than £40,000.
Elderly savers are keeping higher amounts in these accounts, with 19% of over-55s storing over £40,000 in cash. Landbay estimates that homeowners combined could have as much as £433bn in savings accounts despite their dissatisfaction.
The study found that a more than half, at 57%, are aware of the rate they are currently getting and are unhappy. Less than one in four, at 23%, are however content with their savings account interest rate despite the fact that this year 27% expect to earn 0.5% or less on their savings while 8% expect to earn nothing.
But the survey concluded that 12% of the homeowners surveyed are not aware of the savings account rate they receive at all, rising to 18% among those under-54. Older generations are more aware of their rates but as a result have higher levels of resentment with 62% of over-55s unhappy with their savings rate.
The lack of willingness to take risks or wait for access to savings has left many to settle for rates they are unhappy with. The research found a majority of cash savers are risk-averse, 53% would not be willing to accept a small level of risk to savings if it meant a higher return. Despite this, a sizeable minority, at 39%, are open to taking at least a little risk if it means improved returns. When it comes to savings, homeowners in the survey were overly cautious even when faced with the possibility of earning nothing on their savings in 2015.
A third of respondents, at 33%, wanted to have instant access to all their savings, however 42% are willing to wait between one to six months before accessing cash. Almost one in five, 17%, would be willing to lock up their money for twelve or more months, a significant proportion aware that their instant access savings accounts do not offer the best deal for interest accumulation.
Commenting on the research, John Goodall, co-founder and CEO of Landbay said that while it was good to see the Chancellor acknowledge the plight of savers in the Budget with a boost to tax free savings, “the reality is that very few will benefit because of the paltry interest rates on offer from the banks”.
He added: “The savings market is now polarised into two groups. On the one hand we have the settlers, content with little to no interest rate return on their savings but willing to settle as it avoids any form of risk. On the other hand, we have the reachers, a growing number of savers who are keen to make their money work harder and take a small level of capital risk for improved returns. Six years of rock-bottom interest rates has created angst in the savings market, and a new wave of savers are considering alternative forms of finance to avoid their money losing value in the bank.
“When choosing between risk and security it is not all or nothing. Finding the balance between ease of access in savings, and putting some cash under slightly more risk to attain higher rates is merely sound financial planning.”