Rescue package planned for beleaguered building societies

After crisis talks between the Bank of England and several struggling building societies earlier this month, plans have now been announced to help rescue the struggling sector.

Building societies have been hit by exceptionally low interest rate which has caused a fall in the profits made on customer savings. According to The Sunday Times, building societies in Britain hold over £200 billion in customer savings and have loaned over £400 billion into the housing market.

Chelsea, Yorkshire, Skipton, Coventry, Newcastle, Norwich & Peterborough and Principality were all present at the talks last month. It is thoughts that the rescue plans, which will be revealed in more detail in May, will allow the building societies to offer more of their mortgages up for sale to the Bank of England in order to raise the deficit in funds created by exceptionally low interest rates.

This is not the first attempt to rescue beleaguered building societies. Nationwide has already taken over the Derbyshire, Cheshire and Dunfermline building societies, while Yorkshire took over the Barnsley, Skipton took over Scarborough and Britannia merged with the Coop’s financial-services arm.

While the Bank of England plans could represent a life-raft, media reports of the measures may create a headache for building societies as customers lose confidence and withdraw their savings. Public reaction was famously behind the eventual nationalisation of Northern Rock, as customers queued through the streets to remove their savings.

Are you getting a decent interest rate for your savings? TotallyMoney.com has access to an extensive range of account products, from easy access to fixed term, and from current accounts to ISAs. To find the deal that is right for you, head over to http://www.totallymoney.com/banking/ and you could net yourself an interest rate of up to 4.2%.