So far only a handful of banks and building societies have announced savings rate increases following the Bank of England’s widely anticipated move to lift the base rate to 0.75 per cent last Thursday.
This is the highest level in almost a decade, but the vast majority of loyal savers are yet to see any benefit.
Banks also dragged their feet after last November’s base rate hike, with half of all savings accounts failing to rise at all and the average increase being just 0.09 per cent, a fraction of the 0.25 per cent rise.
MoneyComms.co.uk personal finance expert Andrew Hagger said just one in 10 acted within five weeks: “Most are sitting on the fence this time too.”
He said the big banks and building societies seem to be more focused on profit margins than looking after savers: “There is no reward for loyalty so do not feel bad about taking your custom elsewhere.”
Skipton Building Society acted fast by saying it will pass on the full 0.25 per cent to all on-sale variable rate accounts at the end of this month.
Beverley Building Society will pass on the full 0.25 per cent to all personal savings accounts holders, while Cumberland is offering from 0.15 per cent to 0.25 per cent.
On Friday, Ford Money will increase its one and two-year fixed rate bonds to 1.90 per cent and 2.05 per cent respectively, up 0.20 per cent.
Nationwide has announced increases ranging from 0.05 per cent to 0.25 per cent, although its Help to Buy ISA will increase an impressive 0.50 per cent, lifting the rate to 2.50 per cent.
SavingsChampion.co.uk head of research Tom Adams said it is still early days, but savers are right to feel disappointed by the lack of activity elsewhere: “Not all accounts will see an increase and few are likely to increase by the full 0.25 per cent.”
He said many big high street banks offer such derisory rates, in some cases as low as 0.05 per cent, that even if they granted the full increase savers should still shop around for a best buy rate elsewhere (see page 30).
Far from the best
Best buy tables have hardly changed since the base rate announcement, with the BM Internet Saver still paying a market leading 1.35 per cent with easy access on £1 or above.
Paragon pays 1.31 per cent, while Virgin Money, RCI Bank, Shawbrook Bank and Sainsbury’s Bank all pay 1.30 per cent.
Adams said better rates should appear in time: “Do not bank on your existing account suddenly becoming competitive. Switching is the best way to improve your returns.”
While banks and building societies have been slow to reward savers, they have been faster to inflict higher costs on mortgage customers.
For example, TSB has said its variable mortgage rates will go up by 0.25 per cent while its variable rate savings accounts will rise just 0.10 per cent, although children get 0.25 per cent.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said borrowers on tracker mortgages linked to the base rate face the full 0.25 per cent: “This will add £24 a month to a £200,000 repayment mortgage.”
Barclays and Nationwide have both announced they will add the full quarter point to their standard variable rate (SVR) mortgages as well.
Tesco and Skipton increased rates on a number of their new mortgages, but not their entire ranges.
Harris added: “The big six lenders, including Halifax, have not increased the pricing on their new deals yet.”
He said you can still get five-year fixed rates charging less than 2 per cent: “Anyone worried about the impact of future rate rises on their pocket may wish to consider such a deal.”