Despite forecasting that the Bank of England’s base interest rate will not rise until mid-2014, Lloyds TSB International has announced that, from today, it will be increasing the gross interest rates paid on its two-, three- and five-year fixed-term deposits (FTDs) for expatriates.
The rate for two-year FTDs rises from 3.2% to 3.55%, the rate for three-year FTDs from 3.3% to 4%, and the rate for five-year FTDs from 4% to 4.5%. The rate for one-year FTDs remains at 3.1%.
Based on MoneyFacts Offshore Savings rate tables published on 5 January, the new rates are the best on the market for three- and five-year fixed-term deposits.
Lloyds TSB International’s sales data show that demand for one-year FTDs increased tenfold in the three months to the end of November, as savers locked in to better interest rates in the medium term. The market currently expects that the Bank of England will not lift the base rate from its current record low until mid-2014.
Nicholas Boys Smith, of Lloyds TSB International, said, “Demand for short- and medium-term deposits has increased markedly over the past three months. Much of this is due to our improved rates in September, but we’re also aware that many expat savers are trying to make the most of flatlining base interest rates and the expectation that these rates won’t increase for quite some time.
“In 2011, we saw a definite shift towards FTD accounts, particularly those with a one-year term, but also those with longer durations. In this low-interest-rate environment, many people have realised they need to make some changes to ensure they’re getting a decent return on their savings.
“We expect demand for FTD accounts to continue rising, and, with inflation forecast to fall in 2012, it won’t be long before FTD savers are making money in real terms.”
Lloyds TSB International’s fixed-term deposit accounts are available to expats, and residents of Jersey, Guernsey, the Isle of Man and Ireland. The minimum deposit is £10,000, the maximum £5,000,000.The bank provides financial guidance and a checklist to help people emigrate at www.lloydstsb-offshore.com