Why aren’t banks passing on interest rate rises to customers?
Millions of people are being short-changed on savings rates, with banks and building societies failing to pass on this month’s 0.5 percentage point interest rate rise, research has claimed.
On 4 August, the Bank of England pushed up interest rates by 0.5 percentage points to 1.75% as the UK battles to prevent inflation running out of control. It was the sixth successive interest rate hike.
In theory this is good news for the UK’s army of savers, who were the losers from years of interest rate cuts. Many will have been expecting to see the rates on their savings accounts climb – but the reality has all too often been very different.
Research issued on Tuesday found that as of 15 August, Britain’s banks and building societies had passed on the full 0.5 percentage point increase to just two out of 233 easy access savings accounts.
As of that date, the only provider to pass on all of the increase was the West Brom building society, according to the study by the website Investing Reviews.
Providers that had given their accounts some sort of boost – that is, they had passed on part of the increase – included Zopa, Tesco Bank, Atom Bank, Tandem Bank, Skipton building society and Gatehouse Bank, it said.
In all, only 26 easy access accounts (11.2%) had seen any increase at all in the rate paid following the 4 August rise, the study said.
Account providers are at liberty to do what they want with savings rates unfortunately. They might decide to pass on all, some or none of an interest rate rise (or reduction).
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One sliver of good news is that sometimes banks will wait a while before making changes to
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