How fair have the banks and building societies been in passing on rate rises?
Lisa Taylor, analyst at Moneyfacts.co.uk – the money search engine, investigates:
“The dust is finally starting to settle in the personal finance world, following the latest base rate rise to 5.50%. With a full percentage rise potentially hitting our pockets in the last nine months, have the leading banks and building societies passed on the rate rise equally to their borrowers and savers? We decided to take a look.
“The table below shows the change to rates of the savings, overdraft and SVR products for the following banks and building societies: Abbey, Alliance & Leicester, Barclays, HSBC, Halifax, Lloyds TSB, Nationwide BS, NatWest, Northern Rock and Royal Bank of Scotland.
Authorised Overdraft Rates
“The announcements from Lloyds TSB and HSBC to increase their overdraft rates by 0.30% following the May rise has caused quite a stir. But this only scratches the surface of the problem. It is not until you look at the cumulative effect of the last four base rate rises that you see the true impact.
“A few providers have taken full advantage of the opportunity to increase their rates, but instead of passing on the extra costs of the base rate rise, many have exploited the situation, raising rates by as much as 3.10%.
“But surprisingly many current account providers have not taken the opportunity to raise their rates at all. It seems unusual that many of the banks are declining this opportunity to make more money. Perhaps with so much attention focused on their 'unfair' bank charges, they are trying to avoid too much attention being drawn to their sometimes extortionate overdraft rates.
“The difference between the best and worst overdraft rates is quite astonishing: by choosing the highest rate deal it could be costing you four times as much. Take advantage of any 0% deals available and if you do regularly use an overdraft facility, make sure you know the rate you will be charged.
Mortgage SVRs
“It’s no surprise to see lenders passing on at least the full percent rises to their standard variable rate. But it is disappointing to see several lenders have taken the opportunity to pass on a larger increase. While most of the products available from these lenders won’t be directly impacted, those paying an already high SVR will be stung further. There can be no other explanation to this than to increase profitability.
Savings Accounts
“The biggest disappointment is to see how few savings providers are passing on the full increase. A massive 70% of the accounts surveyed passed on less than 1%, with several passing on just 0.51%. With a few exceptions, those accounts which have benefited from the full increase tend to be the flagship accounts, those that the institutions promote and are usually available via direct channels.
“The gap between the best and worst rates seems to be growing, so if you find yourself receiving a poor rate of return and are not benefiting from the rate rises, then its time to switch. This could even be as simple as changing accounts with your existing provider.
The good the bad and the ugly
No one bank or building society stands out as treating its customer particularly poorly or fairly. But what seems to be clear is the pattern to increase borrowing rates by greater amounts than are passed on to savers.”
SAVINGS |
MORTGAGES |
OVERDRAFTS |
||||
| Institution | Account Name | INCREASE | INCREASE | INCREASE | ||
| Abbey | Postal Account | 1 | SVR | 1.09 | The Abbey Current (Db Opt) | 1.00% |
| eSaver | 1 | The Abbey Current (Cr Opt) | 0.00% | |||
| Flexible Saver | 0.55 | |||||
| Branch Saver (No withdrawals) | 0.65 | |||||
| Alliance & Leicester | PlusSaver | 0.95 | SVR | 1.05 | Current Account | 0 |
| Online Saver Issue 2 | 0.75 | Premier Current A/c | 0 | |||
| EasySaver | 0.71 | Premier Direct Current A/c | 0 | |||
| Instant Access | 0.55 | |||||
| PhoneSaver | 0.45 | |||||
| Barclays Bank | E-savings | 0.63 | SVR | 1.05 | First Additions (Option A) | 0.00% |
| Additions (Option A) | 0.00% | |||||
| Additions Plus (Option A) | 0.00% | |||||
| Bank Account (Option B) | 0.00% | |||||
| Additions (Option B) | 0.00% | |||||
| Additions Plus (Option B) | 0.00% | |||||
| Bank Account (Option A) | 0.00% | |||||
| First Additions (Option B) | 0.00% | |||||
| Additions | 0.00% | |||||
| Bank Account | 0.00% | |||||
| First Additions | 0.00% | |||||
| HSBC | Online Saver | 1.19 | SVR | 1 | Bank Account | 2.70% |
| Instant Access Saving | 0.93 | Bank Account Plus | 3.10% | |||
| Flexible Saver (Non Bank Account Plus Customers) | 0.68 | |||||
| Premier Savings | 0.87 | |||||
| Halifax | Liquid Gold | 0.51 | SVR | 1 | High Interest Current A/c | 0.00% |
| Instant Saver | 0.51 | Current | 0.00% | |||
| Saver Reward (Up to 3 withdrawals pa) | 0.51 | Current | 2.00% | |||
| Premium Savings Direct | 0.51 | Moneyback | -1.00% | |||
| Web Saver | 0.55 | High Interest Current A/c | 0.00% | |||
| Web Saver Cash Card | 1 | |||||
| Lloyds TSB | Guaranteed Tracker | 1 | SVR | 1 | Classic Plus | 3.10% |
| Exclusive Saver Platinum | 1 | Gold Service Plus | 1.70% | |||
| Exclusive Saver Gold | 1 | Platinum Plus Current | 0.20% | |||
| Exclusive Saver Select | 1 | Select Plus | 2.20% | |||
| Online Saver | 0.75 | Classic | 0.80% | |||
| Reward Savings (Up to 2 withdrawals pa) | 0.7 | Gold Service | 0.80% | |||
| Platinum Current | 0.80% | |||||
| Select | 0.90% | |||||
| Nationwide BS | Monthly Income 60+ | 1.05 | SVR | 1.1 | FlexAccount | 0.00% |
| e-Savings | 1 | FlexAccount | 0.00% | |||
| 60 Day Direct | 0.85 | FlexAccount | 0.00% | |||
| Bonus 60 | 0.9 | |||||
| InvestDirect | 0.85 | |||||
| CashBuilder | 0.95 | |||||
| CapitalBuilder | 0.85 | |||||
| NatWest | First Reserve | 0.89 | SVR | 1.1 | Advantage Gold | 2.61 / 2.60 / 2.57% |
| e-Savings | 0.91 | Current Plus | 2.30 / 2.62 / 2.58% | |||
| Savings Direct | 1.01 | Current Plus - Adv Blue | 2.30 / 2.62 / 2.58% | |||
| Northern Rock | Select 120 | 0.55 | SVR | 1 | Current | 0.00% |
| Branch Select 120 | 0.8 | |||||
| Tracker Online | 0.7 | |||||
| Direct Tracker 90 | 0.9 | |||||
| Instant Access | 0.75 | |||||
| Base Rate Tracker | 0.55 | |||||
| Royal Bank of Scotland | Bonus 90 | 1.05 | SVR | 1.1 | Royalties Premier | - 2.63 / 2.45 / 1.78% |
| Direct Saver | 1 | Royalties | 2.27 / 2.26 / 2.26% | |||
| Instant Access | 0.85 | IPCA | 2.26 / 2.26/ 2.26% | |||
| Instant Savings Tracker | 1 | Royalties Gold | 2.32 / 2.30 / 2.27% | |||
Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.
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