Savers sold down the river yet again
Banks failing to pass on rise in official base rate
BANKS are charging borrowers more following a rise in interest rates – while leaving long-suffering savers with woeful returns.
Some of the biggest lenders had by last night passed on the full 0.25 percentage point increase in interest rates to mortgage customers, putting household budgets under fresh pressure.
But more than four days after the Bank of England decision, not a single large bank or building society had said it would give savers the full benefit.
Lloyds has increased its standard variable rate for mortgages but taken no action of savings. Barclays did the same thing last week.
Nationwide last night refused to pass on the full rate rise. Savers on an account which is meant to reward loyalty have been given a rise of just 0.1 percentage points. Yet mortgage customers have been hit with the full 0.25 point increase.
Wes Streeting, a Labour member of the Commons Treasury committee, said: ‘Record-low interest rates have been good for borrowers but terrible for savers.
‘Now that the base rate has risen, lenders have a responsibility to pass on the benefits to their loyal customers who’ve worked hard to save for a rainy day and for their retirement.’
Steve Webb, former pensions minister and director of policy at investment firm Royal London, said: ‘Savers have been under the cosh for nearly a decade with record low interest rates. Now that interest rates are starting to rise, savers cannot be expected to wait any longer to see the benefit.’
The HSBC flexible saver account offers the worst savings rate on the market at 0.05 per cent, meaning £10,000 would earn only £5 interest a year.
HSBC chief executive yesterday suggested his bank did not need savers’ money.
John Flint said its retail arm had £50billion spare that could not be spent elsewhere without falling foul of banking regulations. The rules are supposed to make day-to-day banking safer and save taxpayers from having to step in with a bailout if things go wrong. When the Bank of England increased rates to 0.75 per cent on Thursday last week it automatically put up costs for the 1.3million families who have a tracker mortgage.
On the same day, Barclays said it would increase its standard variable rate to 5.24 per cent from 4.99 per cent next month. Lloyds followed suit yesterday by hiking its rates by 0.25 percentage points. Neither has acted on savings rates.
Nationwide told customers that it was putting up some of its savings rates, yet the vast majority will not get the full 0.25 point increase.
Rachel Springall, of data analyst Moneyfacts, said: ‘As a building society, this seems like a missed opportunity to set an example.
‘It now seems even less likely that the biggest high-street brands will pass on the full rise to its savers and not just their borrowers.
‘It’s a real shame, even if Nationwide’s rates do already beat the biggest banks’ basic offerings.’
Natwest owner Royal Bank of Scotland has stayed silent on mortgage and savings rates so far, as has Santander.
Only the Skipton and Beverley building societies have said so far that they will pass on the latest 0.25 point interest rate increase to savers in full.