Money Mail today calls on every bank and building society to pass on the full interest rate rise to savers.
Last week’s Bank of England base rate hike from 0.5per cent to 0.75per cent – its highest level since 2009 – should have been a major boon for savers after years of record low returns.
But so far just two building societies, the Skipton and the Beverley, have agreed to pass on the full 0.25per cent rise. And even they are yet to announce whether this will include loyal savers in accounts closed to new customers.
Money Mail today calls on every bank and building society to pass on the full interest rate rise to savers
Worse still, Britain’s biggest building society, Nationwide, has already let down its members by increasing rates on just a fraction of its savings accounts, some of which will rise by as little as 0.05 percentage points.
TSB, whose customers are still reeling from its IT meltdown, has put up many of its main variable rates by just 0.1per cent. The rest of the big banks, which hold £642 billion in variable rate easy-access accounts between them, have yet to show their hands as to who will benefit and by how much.
Many say they are still ‘reviewing’ their decision and, incredibly, one firm, HSBC, has even put out a statement denying that its savings rates are linked to the base rate. This simply isn’t good enough.
As we detail over the next two pages, banks seem capable of pushing through immediate hikes on mortgage rates – and for the full 0.25 percentage points.
What possible reason could they have for dragging their feet on savings rates, other than a cynical bid to boost their already bulging profit margins?
Last week’s Bank of England base rate hike from 0.5per cent to 0.75per cent – its highest level since 2009 – should have been a major boon for savers after years of record low returns
That’s why today Money Mail is demanding an end to this treachery. We want banks and building societies to pass on the full 0.25 percentage point increase to all variable rate accounts, including those open to new customers, old versions that have been closed for years (some of which pay as little as 0.05per cent) and cash Isas.
Money Mail will be tracking their actions carefully and holding greedy firms to account if they refuse to act. As part of our drive for fairness, we want Nationwide to review its measly savings rate increases.
It should be setting an example to the rest of the industry, not giving its rivals an excuse to boost their bottom lines. Savers are sick and tired of being treated like cash cows by the firms they have entrusted with their money.
Banks have exploited loyal customers time and again since the Bank of England base rate was cut to 0.5per cent in March 2009.
The following month, in April 2009, the top variable deal paid 1.85per cent, available from Anglo Irish Bank. The top Isa rate was 3.45per cent, offered by NatWest.
Since then, banks have been given billions of pounds of cheap, easy money by the Government under its so-called Funding for Lending and Term Funding schemes.
These have proved a disaster for savers. As HSBC revealed yesterday, banks are now awash with cash – in its case £50 billion – and have no need for deposits from their customers. As a result, they have carried out thousands of cuts – some drastic and some so stealthy that savers will barely have noticed – that have reduced rates right to the bone.
Nationwide is passing on nothing to savers with less than £10,000 in most easy-access and easy-access cash Isa accounts
Today, the best catch-free easy-access account and cash Isa pay 1.31per cent with little-known Paragon Bank. No wonder so many people are giving up on the savings habit, with figures last month showing that on average we now spend more than we earn each month.
Base rate did go down to 0.25per cent in August 2016, only to return to 0.5per cent in November 2017.
Figures from Savings Champion, the rate monitoring website, show the average rate went up by just 0.09 percentage points last November, while half of the UK’s 3,238 savings rates saw no increase at all. HSBC, for instance, put up its Flexible Saver account by just 0.04 percentage points – an extra £4 a year on £10,000.
However, Bank of England governor Mark Carney last week explained that some lenders had not reduced savings rates by the full 0.25 percentage points when the base rate was cut.
So when it went back up, they were in fact putting rates back to their original levels. Mr Carney conveniently left out the bit about banks having already cut rates so severely – with no apparent reason other than boosting their profits – that they couldn’t actually go much lower.
But, crucially, he indicated that the same excuses will not wash this time around. This should be particularly true for providers that cynically cut rates in the days and weeks before the Bank of England announcement.
Research by Money Mail’s savings expert Sylvia Morris found National Savings & Investments, Yorkshire Building Society and Nationwide were guilty of this practice.
Banks have exploited loyal customers time and again since the Bank of England base rate was cut to 0.5per cent in March 2009
Nationwide is passing on nothing to savers with less than £10,000 in most easy-access and easy-access cash Isa accounts.
Even those with between £10,000 and £50,000 will see a paltry 0.05 percentage point rise, against the 0.25-point rise in base rate. As a result of cuts meted out by the society in June, weeks before the base rate rise, some savers will end up earning less with base rate at 0.75per cent than when it was 0.5per cent.
For example, those in its Instant Isa Saver earned 0.75per cent until the end of June, when the society cut the rate to 0.5per cent.
From the end of this month, those with less than £10,000 will continue to earn 0.5per cent with no increase at all. If you have between £10,000 and £50,000 in your account, you’ll see just 0.05 points more – worth just £5 a year on £10,000. If you have £50,000 or more, you will see only a 0.15per cent rise. On its Instant Access Saver, down from 0.35per cent to 0.1per cent in June, the top rate from August 31 will be 0.25per cent on £50,000 or more.
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Those with less than £10,000 will continue to earn just 0.1per cent while on £10,000 to £50,000 there is a 0.05 percentage point rise to 0.15per cent. Even those in Nationwide’s Loyalty Saver, who have been members of the society for 15 years or more, will see only a 0.1 percentage point rise.
There is no increase in its Junior Isa or Smart Saver, which suffered a cut from 1.6per cent to 1per cent in June. Nationwide says the changes are designed to ensure it pays more than its main competitors on most accounts. It says it put up rates by as much as it could afford. A spokesman adds that competition in the mortgage market has put pressure on its margins.
Yorkshire BS, the third largest mutual, launched a new account last Thursday — the same day as the Bank of England raised base rate — that paid less than the old version. Its Single Access Saver issue 11 pays 1.15per cent, whereas the previous issue — withdrawn on Wednesday — paid 1.2per cent. A spokesman says it aims to offer above average rates but must also ‘maintain long-term financial stability for all members’.
Last month, National Savings & Investments (NS&I) announced it will cut the rate on its Direct Isa from its current 1per cent to 0.75per cent from next month. Following the base rate rise last week, an NS&I spokesman said: ‘The decision on the Direct Isa remains in place. We review the rates on all of our products regularly and recommend changes to HM Treasury when we believe they are appropriate.’ TSB, another firm which claims to put its customers first, is increasing variable savings rates for children by 0.25per cent. But all other variable rate deals will increase by just 0.1per cent.
A spokesman for Lloyds Banking Group, which includes giants Halifax and Lloyds Bank, says: ‘The base rate is one of a number of factors we take into account when reviewing interest rates.’
Ross McEwan, RBS-NatWest chief executive, says a significant majority of savers will see an increase. Santander says it will let customers know if it makes any changes. It is adding the full 0.25 percentage points to accounts where the rate is linked to base rate from the end of the month. Barclays is reviewing rates while Co-op says any changes would come into effect on August 30.
A spokesman for HSBC says: ‘While our savings rates are not directly linked to base rate, we will review them.’
By contrast, Skipton BS will raise rates on accounts currently on sale by 0.25 percentage points by the end of the month. It is looking to raise rates on old accounts — saying savers will earn at least 0.6per cent.
Virgin Money’s Regular Saver, Help to Buy Isa and Savers Reward will also see the full rise. It has yet to announce what will happen to its other accounts.
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