Just 1 in 9 banks boost savings after rate rise

ONLY one in nine banks and building societies have increased their interest rates for savers after the Bank of England raised its base rate.

The figures emerged yesterday as National Savings & Investments finally boosted rates for more than 25million savers, piling pressure on the big banks to do the same.

The Government- owned savings bank said it would pass on the full Bank of England 0.25 percentage point rate rise to savers from December 1. On November 2, the Bank increased its base rate from 0.25 per cent to 0.5 per cent – the first time in a decade that it has raised the base rate.

But eight days later only 17 out of 150 – or one in nine – savings providers, including NS&I, have passed on the rise to savers, according to data firm Moneyfacts. By contrast 22 providers have passed on the full 0.25 per cent increase to mortgage borrowers. On Wednesday, Santander became the first of the big banks to announce changes to its savings payouts. Yesterday Lloyds and Halifax revealed their rates.

But they were criticised for failing to increase all of their rates by the full amount. Some deals are being bumped up by only 0.09 percentage points, while others will not rise at all.

Barclays, HSBC and RBS/NatWest say they are still ‘reviewing’ their savings deals.

According to estimates by consultancy DJB Research, banks’ decision to delay increas- ing their rates is costing savers £4million a day in interest.

NS&I’s move means rates on its Direct Isa will rise from 0.75 per cent to 1 per cent on December 1, while rates on its Direct Saver account will go up from 0.7 per cent to 0.95 per cent.

The number of Premium Bond cash prizes paid out each month will increase from 2.3million to 2.9million, while the odds of winning a prize will improve, from 30,000-1 to 24,500-1. The rate on Premium Bonds will rise from 1.15 per cent to 1.4 per cent. This is not interest but reflects the amount paid out in prizes.

Last night experts accused the big banks of profiting at the expense of their customers.

Tom Adams, of comparison site Savings Champion, said: ‘It is great news for savers that NS&I has decided to pass on the full rate rise to savers, who have had a difficult time over the past few years.

‘While it’s not unexpected, it’s a real disappointment to see banks not doing the same.’

Justin Modray, of adviser Candid Financial Advice, said: ‘This is blatant profiteering from the banks. They would still much rather put making money ahead of treating customers fairly.’

Reza Attar- Zadeh, of Santander, said: ‘We have carefully considered our options and have sought to achieve a balance between rates we offer our savers and borrowers.’

Lloyds Banking Group, which also owns Halifax, said: ‘Whilst most of our savers will receive an increase of 0.15 percentage points we are increasing some accounts by up to 0.5 percentage points.’