UK Savers Denied Full Base Rate Rise on Easy Access Accounts

By: MoneyFacts

As we predicted in August, the savings market hasn’t yet fully benefitted from the base rate rise, which savers may have expected. Now one month on, the latest research from Moneyfacts.co.uk can reveal that many of the nine biggest high street banks* have failed to pass on the 0.25% rate rise to their easy access accounts. In fact, the average easy access rate has risen by just 0.06% since last month.

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“As a month has passed since the base rate hike, savers will be disappointed by how little impact it has made, with many denied the full rise. There is still not one high street bank matching the latest Bank of England base rate of 0.75% for new easy access customers and less than a third of the overall market can beat its level. At the same time, around half of the providers offering variable rate savings accounts have not yet made it clear whether they will be passing on the full rise.

“It remains to be the case that the biggest brands are in no rush to entice savers’ deposits thanks to years of cheap funding from the Government through lending initiatives. At the same time, it isn’t down to the banks not being able to pass on a rate rise either, because they have on selected tiers or accounts (child savers, junior ISAs, Help to Buy ISAs and high balances, for example).

“Despite this, other brands have been fairer to savers and have passed on the full rise to easy access accounts, like Sainsbury’s Bank, Beverley Building Society and Vernon Building Society. More patience will be required from savers though, particularly if they have their cash with a mutual, as it could take a few more months for a decision on rate increases to be made.

“A similar trend can be seen with variable ISAs, which have seen minor improvements. Only a few providers have passed on the latest 0.25% increase, for example Halifax, with its ISA saver now paying 0.60%, up from 0.35%. Yet some rises may seem like a poor consolation prize to savers, such as with the Barclays ISA, which has increased selected tiers by just 0.05%, and means savers would receive just £5 more a year with a £10,000 investment. The average easy access ISA has risen by just 0.06% in the last month, to stand at 0.88%.

“Savers may have needed this jolt of bad news to come to the realisation that better returns can be found with the more unfamiliar brands, and as 28% of the easy access account market fails to beat 0.75%, they should take time out to study the Best Buy tables and switch if they are getting a raw deal.”

*Banks selected for comparison are considered the biggest on the high street. This comparison looked at Barclays Bank, Bank of Scotland, HSBC, Halifax, Lloyds Bank, NatWest, Royal Bank of Scotland, Santander and TSB. The accounts comprise easy access and not child savers.

moneyfacts.co.uk is a financial product price comparison site, launched in 2000, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, there is no commercial influence on the way moneyfacts.co.uk ranks products, showing consumers a true picture of the best products based on the criteria they select. The site also provides informative guides and covers the latest consumer finance news, as well as offering a weekly newsletter.

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