LIVING COSTS HIT SAVINGS

Households are saving less than at any time since the height of the financial crisis, figures have revealed.

Pathetic rates of interest on many savings accounts have deterred people from squirrelling money away.

Meanwhile, rising living costs have forced many to raid their nest eggs to make ends meet.

Experts warn the combination of the two risks could leave many households exposed when borrowing costs start to rise.

Trade body UK Finance said the annual growth in savings slowed to 2.2% in August, the lowest since May 2009.

Banks saw £1billion withdrawn from tax-free cash ISAs last month.

One reason is the rule changes allowing people to earn £1,000 interest tax-free, which has made ISA rates look paltry.

The figures also revealed a slowdown in consumer debt.

The annual growth in credit card borrowing eased from 5.3% to 5% last month.

Meanwhile, 41,807 mortgages to buy a home – rather than remortgaging – were approved in August, which is above the sixmonth average and 11% higher year on year.