Bank of England Base Rate

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Albermarle said:

HappyHarry said:

Traditionally, banks pay interest to depositors at a little below BOE rates, and charge debtors (loans / mortgages) a little above BOE rates. The bank makes the profit in the difference between their lending and borrowing rates.

In recent years, the BOE rate has been so low that both the lending and borrowing rates have been above BOE rates. This was never sustainable, and as BOE rates move up, we will see borrowing and lending rates moving back towards their traditional positions.

This will of course, be criticised by savers and the Daily Mail, and ignored by borrowers.

Although the smaller banks, like Aldermore, Shawbrook etc can offer better rates. Maybe their lending rates are a bit higher as they tend to lend to SME's, car finance etc 

It all boils down to how desperate they are for funding. Generally, the smaller players cannot attract inter-bank deposits as easily as the bigger players as they're seen as riskier credits and they also tend to lack the collateral the Bank of England demands i.e. gilts with a haircut to borrow from it. This leaves them with the retail market.