Not surprisingly 80% of younger people (aged 25-34) preferred this compared to just 38% of people aged 55-64. Only one in four of all investors (28%) would choose the opposite - higher savings rates but higher mortgage rates.
Annabel Brodie-Smith, Communications Director, AITC, commented: "There are some tentative signs that consumer confidence in the stockmarket has slightly started to increase. With interest rates at a historical low, some consumers with savings in traditional bank and building society accounts are realising that they could get better returns by switching into other vehicles such as equities or bonds.
"However, it is clear that the vast majority of investors are still cautiously holding back from the stockmarket this summer and are waiting to see a sustained recovery. Just over three quarters of investors are still planning to sit tight on their investments and a greater number of people are uncertain about what to do with their investments."
Nick Train, Fund Manager, Finsbury Growth Trust, a UK Growth investment trust expects interest rates to decline to around 2% over the next few years as the housing and consumer debt boom subsides. He believes a rising savings ratio will benefit the UK financial services industry and expects UK inflation to settle at 1% - 2% for the next decade
On the outlook for UK equities, Nick Train commented: "UK equities either need to offer a dividend yield of 4.0% gross, or need to trade on an earnings yield of 4.0% for a P/E of 25. Today, we are of the opinion that there are sufficient growing companies within the FT All-Share Index to justify the P/E target, meaning that UK stocks are, perhaps, 35% undervalued. "
