Analysts have warned that the Bank of England's Funding for Lending scheme, which is aimed at boosting the housing market in the country, is impacting savers in the country.

They warned that the scheme is punishing savers and no longer reducing new mortgage costs. A host of banks and building societies, which are able to access cheap funding, are now withdrawing saving accounts and reducing interest rates. Mark Carney, who took charge of the Bank of England as its new governor, has indicated that the central bank is not likely to increase interest rates for years.

Outgoing governor, Sir Mervyn assured the industry that the interest rates are likely remain low as rising interest rates would create problems for the indebted homeowners. The interest rates, which remain at 0.5 per cent, will continue to affect savers in the country for a longer time to come. Savings rates have fallen significantly due to the low interest rates in the country.

According to financial information website Moneyfacts, an average -free cash Isa rate has fallen from 2.44 per cent one year ago to just 1.66 per cent. The rate is about half of the Consumer Prices Index (CPI) inflation that rose to 2.7 percent in May.