How banks put up mortgage rates but don’t reward savers
THE double standards of banks have been exposed as research proves they hit borrowers with the latest interest rate rise but failed to reward savers.
Finance giants were quick to increase interest rates on home loans when the Bank of England last raised its base rate from 0.25 per cent to 0.5 per cent in November.
However, just one in ten passed on the full increase to millions of customers who have money in instantaccess savings accounts within five weeks. And some banks even withdrew the best paying instant access savings accounts and replaced them with new deals offering a worse rate of return.
The research was carried out by Which? and relates to a survey of mortgage and saving rates in the five weeks after the last base rate change.
Among the big names in the dock are Barclays, Halifax and the TSB, along with a number of smaller building societies.
The interest rates offered on many savings accounts are so pitifully low people would not be much worse off if they just left their cash under the bed.
The consumer group suggests that unless things improve, anyone with a mortgage would be better off overpaying on their home loan – providing there is no penalty for doing so – than putting it into a savings account.
Which? Money expert Gareth Shaw said: ‘The last base rate rise saw clear double standards from some financial institutions, hiking the bills of mortgage-holders while denying savers the full benefit and actually withdrawing some of the most competitive deals altogether.
‘Ahead of a possible future rate rise, we’re calling on banks and providers to be fair to their customers across the board.’
Looking at mortgages, just over half – 53 per cent – of banks and building societies hit customers with the 0.25 percentage point rise in the Bank of England base rate in the following five weeks.
At the same time, the average interest rate charged on fixedrate deals for two, three and five years all went up. The rise was notable on five-year deals.
ON its website, TSB boasts: ‘We’re always open and honest, with no nasty surprises.’ Paul Pester, the bank’s £2million-a-year boss, should try telling that to the 1.9million of his customers who’ve been suffering some of the nastiest surprises of their lives since the weekend.
Many have lost all access to their money, unable to pay bills or employees’ wages or shop for essentials. Others have seen unexplained sums withdrawn or credited to their accounts.
In a glaring threat to security, hundreds report logging on to TSB, only to see strangers’ accounts. Now we’re told some problems won’t be fixed until the end of April.
Indeed, this is an IT meltdown on a mammoth scale – caused, it appears, by pressure from the bank’s Spanish owners to save money by switching to a new system before it was ready.
Why, in the financial sector, do customers always come last? Of those affected, many were with Lloyds before they were told out of the blue their accounts were being moved to TSB under orders from the European Commission. Nor were they consulted when TSB was sold to Spain’s Sabadell three years ago.
Like other banks’ customers, meanwhile, they were bullied into banking online – to suit not them, but lenders wanting to close branches. Now this.
But then what better have we come to expect of a sector which puts greed above all else? Indeed, the TSB meltdown coincides with a damning survey on the treatment of borrowers and savers, conducted by consumer group Which?.
This finds lenders were quick to increase rates on loans when the base rate last rose. Yet only one in ten passed on the full increase to savers within five weeks – while some offered worse returns than before.
Is this the thanks taxpayers get for bailing out the City to the tune of £1trillion?
The Mail urges regulators to make an example of TSB – not just forcing it to pay full compensation, but fining it heavily for causing so much grief. Somehow the message must be rammed home that bankers must start putting customers first.