Banks Are Not Passing Interest Rate Rise To Savers

10/08/2018

Only one of 100 banks and building societies has passed on last week’s interest rate rise in full to all its savers, prompting anger from MPs and campaigners, reports The Times Online.

The Bank of England recently raised the base rate for only the second time in a decade — by a quarter percentage point to 0.75 per cent.

HSBC and Barclays, two of the five biggest banks, have already increased the cost of mortgages by the full rate rise but have left savers without any benefit. Lloyds is to follow suit on September 1. The Royal Bank of Scotland estimated that the base-rate rise would add £300 million to its income projections by 2020.

Nicky Morgan, chairwoman of the Treasury select committee, said: “It’s no wonder that our banks have such a lot of work to do to rebuild trust among customers when they ignore the first opportunity to give a little something back to savers, while moving speedily to increase costs for borrowers.”

While 28 per cent of lenders have already put up their rates for variable mortgages, often by the full 0.25 percentage points, only 10 per cent of savings account providers have said that they will increase their rates, according to Moneyfacts. Where banks and building societies have agreed to increase rates for savers, on average they have done so by 0.21 percentage points.

Nationwide has said that it will increase rates by only 0.1 percentage points for some savings accounts. TSB, which recently left customers unable to access their accounts for weeks because of an IT glitch, will also pass on an increase of only 0.1 percentage points to the customers of some of its variable savings accounts.

Only Beverley Building Society, based in Yorkshire, says that it will increase its savings rate for all customers by the Bank’s full rise, to match the base rate of 0.75 per cent.

Barclays raised the standard variable rate for its mortgages by 0.25 points quickly after the base-rate rise, but took no action on savings. Of the “Big Five” banks — Lloyds, Santander, HSBC, RBS and Barclays — only Santander has announced detailed plans for increases to some savings accounts. For an online and some children’s accounts it will pass on the full 0.25 points.

John McDonnell, the shadow chancellor, said: “The banks never waste an opportunity to rip off customers. Bank directors have short memories. It’s only a decade ago the same taxpayers they are now profiting from were the very people paying for their bailout.”

Nationwide: Rise of 0.1 percentage points for some savings; mortgage rate increased by 0.25 percentage points
Barclays:
 No increase; mortgage rate increased by 0.25 percentage points
Lloyds:
 No increase; mortgages to increase by 0.25 percentage points on September 1
HSBC:
 No increase; mortgage rate increased by 0.25 percentage points

Come on banks – play fair. If you would like more information, please contact us >>

Written by Colin Caulfield | Director

Colin is a Chartered Financial Planner & Pension Adviser Of the Year Read more >>

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