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Expat rates: fixed savings suffer from base rate doldrums

Banks have been cutting the rates on their euro-denominated accounts

Base rate is now in its seventh year at 0.5pc and shows no sign of rising, making life as difficult as ever for savers.

But at least they can stop worrying that base rate has further to fall. Mark Carney, Governor of the Bank of England, said last week that it would be “extremely foolish” for the bank to cut rates further to try to combat low inflation caused by the fall in oil prices.

However, there is still no sight of a rise in base rate this year experts are pencilling one in for 2016 at the earliest.

As a result, some expat fixed savings rates have dropped. Permanent International ( permanent-bank.com ) has cut rates on its one-, two-, three- and five-year fixed rates as well as reducing rates on its less than one-year deals, but only for euro-denominated accounts. It has also launched new issues of its 15-month and 18-month fixed deals, but at lower rates than before.

The biggest cuts at Permanent affect its two-, three- and five-year fixed rates. It was paying 2.03pc fixed for two years but is now paying 1.69pc. For three years, before March 16 Permanent was paying 2.06pc but for new savers now the rate is 1.67pc. And for five years, Permanent was paying 2.11pc: now the rate is 1.64pc.

Permanent’s euro-denominated fixed rates have all been cut; they now go from 0.2pc fixed for three months on a minimum £100,000 (previously 0.4pc) to 0.79pc fixed for five years (before it was 1.17pc) on £20,000 plus.

The new issues of its 15-month and 18-month fixed deals are 1.6pc and 1.7pc respectively the previous issues paid 1.7pc and 1.85pc.

Santander both its Isle of Man branch ( santander.co.im ) and its Channel Islands-based private bank ( santanderpb.je ) has cut rates on its one- and two-year fixed rates and has withdrawn its three-year fixed rate deal.

Santander was offering 1.1-1.2pc as a one year fixed rate and now is paying 1-1.1pc. The two-year rate was 1.4-1.5pc and is now 1.25-1.35pc. The three-year deal, yet to be replaced, was 1.75-1.8pc. For both deals, the lower rate is paid on £500-£199,999 with Santander’s Isle of Man branch and £50,000-£199,000 with the private bank.

Even after the cuts, the two-year Santander deals are competitive although beaten by the reduced Permanent two-year fixed deal at 1.69pc. The Santander one-year deal of 1-1.1pc is beaten by at least three other providers with the top rate 1.45pc offered by Nationwide International ( nationwideinternational.com ).

These changes make the recently-launched three-year fixed rate of 2.2pc from Skipton International not five years, as mistakenly stated in the previous Expat Rates column look particularly good for those wanting certainty for a longer time period ( skiptoninternational.com ).

Even if base rate starts to go up next year, it is unlikely to climb dramatically, so it is reasonable to expect the Skipton deal to remain competitive in the future.

No early access to the money in the bond is allowed, so do not put your money in unless you will not need to get at it earlier.

• Britannia International has now completed its closure procedure. Last year the Isle of Man based bank announced it was to shut as its parent bank, Co-operative, decided to concentrate on its home market by closing it.

It has now written to the few remaining customers who have not moved their money away telling them their accounts have been closed.

Any remaining balances have been moved into a segregated account scheme, which will become effective on March 17. If you do have money that is now being moved into the segregated account, you need to contact the scheme administrator, Appleby Trust (Isle of Man) Limited, 33-37 Athol Street, Douglas, Isle of Man IM1 1LB.

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