British households striving as UK banks play on interest rates rise | Personal Finance | Finance

The analysis shows that none of the big banks passed on last month’s increase to savers – but they have already actively started raising their mortgage rates. Financial experts have accused banks of taking advantage of rising interest rates to strengthen their margins to the detriment of their customers.

Steve Baker, MP for Wycombe and former member of the Treasury Select Committee, said: “A generation has grown up not knowing the attractive rates on cash savings, so it is particularly infuriating that the banks have not passed on the rising rates. base rate on savers. If they can’t do it profitably in this environment of unprecedented interest rates, let them say it. “

Interest rates were raised slightly last month in an attempt by policymakers to slow rapid inflation. After lowering interest rates to a record 0.1% during the pandemic, the Bank of England raised the base rate by 15 basis points to 0.25% in December.

A review of over 100 banks and building societies found that only four had increased the interest rate on some of their easy-to-access variable savings accounts. And only the Suffolk Building Society passed the full 0.15% increase to savers on all variable accounts after the announcement, according to Moneyfacts analysis.

None of the big banks did, but Santander, Lloyds and Halifax all announced increases to their standard variable mortgage rates of 0.15% shortly after the Dec.16 hike. And banks began to hike rates on many fixed-rate deals in November, ahead of the Bank of England’s move. HSBC, Barclays and NatWest have all raised their rates.

Nationwide started the new year by raising the rates on some of its fixed loans by up to 0.45 percentage points, three times the Bank of England’s 0.15% increase. And experts have warned that there could be worse to come.

Eleanor Williams, a financial expert at Moneyfacts who carried out the banks study, said: “With the possibility for the Bank of England to apply further base rate hikes in the coming months, there is no guarantee that the cost of borrowing on mortgages will not continue to increase overall.

Myron Jobson, personal finance activist at Interactive Investor, said: “Cash savings accounts are generally not the best places to put your money in the long term as it is being eroded by the rising cost of living in terms of money. real.

Kevin Mountford, co-founder of Raisin UK, said: “It is clear that the big banks are using the base rate change to improve margins by passing it on to borrowers but not to savers. I have several HSBC products and from next month their credit card. the rates go from 16.9% to 18.9% and yet their Flexible Saver remains at 0.01%.

“It also appears that other big banks such as Barclays, Lloyds and Santander have also failed to pass the rate hike on to savers. the biggest players. “

SAVING TIPS TO REMEMBER

SAVERS who want a better interest rate should shop around to see what’s available, especially from lesser-known “challenger” banks, writes Harvey Jones, chief personal finance editor. Cynergy Bank pays 0.70% market on £ 1 and above with easy access, but beware as this rate drops to 0.30% after 12 months. While Shawbrook pays a variable 0.67% on a minimum deposit of £ 1,000.

Secure Trust Bank pays 1.02% on a minimum of £ 1000, with 120 days notice, or 0.85% with 60 days notice. For those who wish to lock in money longer, Zopa pays a fixed rate of 1.34% on £ 1,000 and above for one year or 1.56% per annum fixed for two years. Secure Trust Bank pays 2.10% per annum, fixed for five years. It might sound good today, but it can be disappointing if rates rise rapidly over the next couple of years.

You can also consider premium bonds, which pay an annual price rate of 1%. Another option is to transfer your day-to-day banking transactions to a high interest checking account. Read the terms and conditions before you move. You may need to pay a minimum amount into the account each month and set up at least two direct debits. Invest in stocks and stocks if you want a higher return, but the capital is at risk and you should never invest for less than five years.