Mortgage interest rates helping the rich to save more?

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Matt Barnes and Chris Lord

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People save more in a recession. When the economy falters people worry more about their employment, and become more cautious about spending and borrowing, so they try to put a bit more money aside just in case the worst happens to them. However, the recent recession has seen lower levels of saving than previous recessions. There are two main reasons for this. The first is that low interest rates mean people are less motivated to save. The second is a bigger long-term squeeze on real incomes due to higher tax, rising energy prices and falling real wages. This has meant people have less room to increase savings and reduce debt, with some even struggling to pay bills - let alone having money left over to save. But new analysis from NatCen Social Research has shown that the recession has had less impact on the savings behaviour of the richest households – and if anything has enabled many of them to save even more than before.


Economics, Savings And Assets and Household Economics