48 hours after rate rise and still banks won’t pass it on to savers
BANKS – and the Government’s own savings provider – were accused of treating savers like ‘cash cows’ last night after failing to pass on the first rise in interest rates for a decade.
The Bank of England increased its base rate from 0.25 per cent to 0.5 per cent on Thursday, but National Savings & Investments is among six major names which are yet to boost returns for savers.
Lloyds, Barclays, RBS- NatWest, Santander and HSBC have so far defied calls from the Prime Minister and Bank of England governor Mark Carney to pass on the interest rate rise to savers. The banks say they are still reviewing the situation and will make announcements shortly – but Lloyds and Barclays have already hiked costs for mortgage borrowers.
Ros Altmann, the former pensions minister, savers were being treated like ‘cash cows’, while other experts called on NS&I to ‘set an example’ for the big banks. Baroness Altmann said: ‘Banks are very quick to pass on any savings cuts and then they don’t pass on the increases. It is really disappointing because with inflation where it is, savers need all the help they can get.’
Justin Modray, of Candid Financial Advice, added: ‘Banks are driven by greed so it’s no surprise that they are holding out, but you would expect a government-backed agency to be doing more.’
The reluctance is at odds with comments from Theresa May’s official spokesman, who said on Thursday: ‘Following the rate rise, we would expect to see higher interest rates to be passed on to savers.’ Mr Carney also said he ‘expected’ banks to change savers’ rates accordingly.
However, they appear far more willing to pass the rate rise on to borrowers. The monthly bills of 1.4million households with tracker mortgages rose automatically when the Bank increased base rate on Thursday.
Barclays and Lloyds’ will increase their standard variable rate mortgages – the rate borrowers move onto when their fixed deal ends – by 0.25 percentage points on December 1, to 4.99 and 3.99 per cent respectively.
Nationwide, Skipton, Yorkshire and Coventry have all pledged to increase their savings rates by 0.25 percentage points from next month. TSB announced a smaller increase, of 0.15 percentage points – although its variable rate mortgages will rise by 0.25 percentage points from next month. Yesterday, Virgin announced increases of 0.25 percentage points to selected savings accounts with no change to mortgage rates.
A spokesman for NS&I refused to confirm it would take action, saying only: ‘We review the rates on all of our products regularly and recommend changes to HM Treasury when we believe they are appropriate.’