Banks Are Failing To Pass On Interest Rate Rise
Savers could be losing almost £4 million a day as banks fail to pass on last week’s interest rate rise. The Sunday Times reported that RBS, HSBC, Lloyds, Barclays, and Santander are “reviewing” whether to raise their variable rate savings deals. In theory, these rates should mirror the Bank of England’s rate rise from 0.25 to 0.5%.
In contrast to the hesitation demonstrated with implementing the rate rise for savings accounts, Lloyds, Halifax and Barclays have been quick to tell mortgage customers to ready themselves for a full rate increase next month. This raises the question of fairness, and the Sunday Times article observes “the contrasting treatment of savers and borrowers will raise accusations that the banks are taking advantage of the increase to boost margins.”
The delay in applying the interest rate rise to variable rate savings accounts means that savers are losing a collective £3.9 million a day in interest, according to David Black, director of DJB Research. On the other side of the equation, the interest rate hike being applied to mortgages is going to result in people paying more on their monthly home repayments.
One potential way to prepare yourself for the change in circumstances is to look for a dependable and diversified investment solution. Even with the interest rate rise, Cash ISAs aren’t going to return a major number. However, with a Stocks & Shares ISA, your return is based upon the performance of the fund your money is invested within.