Investors `choose high interest accounts over volatile market`

Volatility in the stock market is leading investors to look for a "safe" high interest account for their money, according to a major bank.

Due to a rise in mortgage defaults in the US as the housing market there slows, stock market conditions have become increasingly unstable in recent weeks, forcing financiers to look elsewhere for their investments, Sainsbury`s Bank has said.

High interest accounts have seen a rise in popularity in recent weeks, with Sainsbury`s Bank seeing a 42 per cent rise in the amount of money deposited in its internet saver account between August 6th and 19th, compared to the same period last year. The account offers an interest rate of 6.25 per cent.

Peter Wood, head of savings at Sainsbury`s Bank, said: "I would be very surprised if there were not other savings providers who are reviewing their existing product ranges and realising that there is an opportunity to attract more funds if they`re a bit keener on rates."

A series of interest rate rises in both the US and the UK have made paying back loans more expensive and has made stock markets across the world lose stability.