Banks passing on BOE interest rate increases

redux

I recently closed a credit union regular saver account when they didn't send a statement for 18 months, then turned out to have reduced the dividend rate from 1% to zero

An MSE article less than a month ago says

Credit unions offer an alternative to traditional banks and building societies for saving and borrowing. They can sometimes beat the rates on the high street. 

PixelPound

Altior said:

What is seemingly outrageous is the apparent financial ineptitude of much of the UK adult population. Many of them seemingly anticipating sub 1% interest rates for the 30 year life of their domestic mortgage liabilities. Many of them also seemingly incapable of withdrawing cash funds held with one provider, and opening up another savings account with a different provider. If only it was possible to do this online in 5 minutes, or there were now various savings platforms to do this 'work' for you.

It is of course this kind of ineptitude which screwed up the competitive domestic energy markets.

It's super awesome as society hurtles inexorably towards the driver of policy being the requirement to mandate for the lowest common denominator. I'm sure many would be happy if the competitive savings market was killed, as long as the financially incapable received a slightly improved interest rate automatically, and the capable suffered from the resultant lack of competition. 

Quite a lot of people prefer to keep on the high street, a bit like people wanting to keep to big 6 energy.

What's the difference between the best rate mortgage and average high street bank mortgage?
Then compare the same for saving rates. 

Altior

nic_c said:

Altior said:

What is seemingly outrageous is the apparent financial ineptitude of much of the UK adult population. Many of them seemingly anticipating sub 1% interest rates for the 30 year life of their domestic mortgage liabilities. Many of them also seemingly incapable of withdrawing cash funds held with one provider, and opening up another savings account with a different provider. If only it was possible to do this online in 5 minutes, or there were now various savings platforms to do this 'work' for you.

It is of course this kind of ineptitude which screwed up the competitive domestic energy markets.

It's super awesome as society hurtles inexorably towards the driver of policy being the requirement to mandate for the lowest common denominator. I'm sure many would be happy if the competitive savings market was killed, as long as the financially incapable received a slightly improved interest rate automatically, and the capable suffered from the resultant lack of competition. 

Quite a lot of people prefer to keep on the high street, a bit like people wanting to keep to big 6 energy.

What's the difference between the best rate mortgage and average high street bank mortgage?
Then compare the same for saving rates. 

That's fine then isn't it, they are welcome to do that. People like me are happy to shift around, seeking out the best rates where the balance is protected.

I feel like it could be argued otherwise, to a degree, if balances were at risk with any operator providing a good rate. But they aren't, for real world balances anyway. 

The reality is though, that many many people are financially incompetent through lethargy. Most of them don't even maximise the rate that they earn on their savings within the same bank's products!

Altior

If we had to legislate for this in any way, I would support a requirement for a provider to let their customer know periodically if there is a product that they are eligible for, that had an improved rate compared to any accounts that they currently held positive balances in.  

TheBanker

nic_c said:

Altior said:

What is seemingly outrageous is the apparent financial ineptitude of much of the UK adult population. Many of them seemingly anticipating sub 1% interest rates for the 30 year life of their domestic mortgage liabilities. Many of them also seemingly incapable of withdrawing cash funds held with one provider, and opening up another savings account with a different provider. If only it was possible to do this online in 5 minutes, or there were now various savings platforms to do this 'work' for you.

It is of course this kind of ineptitude which screwed up the competitive domestic energy markets.

It's super awesome as society hurtles inexorably towards the driver of policy being the requirement to mandate for the lowest common denominator. I'm sure many would be happy if the competitive savings market was killed, as long as the financially incapable received a slightly improved interest rate automatically, and the capable suffered from the resultant lack of competition. 

Quite a lot of people prefer to keep on the high street, a bit like people wanting to keep to big 6 energy.

What's the difference between the best rate mortgage and average high street bank mortgage?
Then compare the same for saving rates. 

When I search using my mortgage details for a three year fix, the lowest rates (the whole first page) are high street lenders. HSBC, Nationwide, Santander and Coventry Building Society. They range from 4.99% (HSBC) to 5.46% (Coventry), both with a £999 product fee.

There's a difference though - I don't think there are any mortgage equivalents of Chip (self service through an app). And I think the cost of servicing a mortgage book is different to a savings book. Apart from the odd enquiry, I doubt the branch networks have a lot to do with mortgages, so most of the costs of running branches, ATMs etc are probably apportioned to the savings business. 

Obviously a different term, different LTV etc would probably yield different results. But on the first five pages, the only lender who doesn't have a branch network is Accord, which is part of Yorkshire Building Society. 

Swipe

Why doesn't Martin Lewis put pressure on the Govt to increase the NS&I savings rates (and increase the staff numbers). Then if everyone is encouraged to flock to NS&I, the other banks will have to beat them to get custom.

RG2015

Swipe said:

Why doesn't Martin Lewis put pressure on the Govt to increase the NS&I savings rates (and increase the staff numbers). Then if everyone is encouraged to flock to NS&I, the other banks will have to beat them to get custom.

I believe that NS&I have an agreement not to offer top rates. By being effectively government backed such a move would be considered anti competitive.

One may argue though that the big banks are also effectively government backed as they are too important to be allowed to fail.

coastline

Article from 2008 so it's nothing new..

Banks vs building societies: Who's best? | This is Money

At the end of the day it's the way people are. We are all different. Some employ tradesmen others DIY. Some never go past M&S others shop online. When I was young I had my salary paid into a bank account . Savings went into a building society in the high street. You couldn't fail to see the rates they were in the window. Still are and some are a metre square. Imagine pubs and restaurants doing the same. That'll be the day.

This years report from the BOE and other details. 

Savings facts from the Bank of England show that, as of August 2022, there was almost £280 billion in accounts paying no interest. 

Research by the BSA found that almost a quarter (23%) of savers don’t check the interest rate before opening an account, with a third (33%) failing to compare interest rates between other accounts. 

However, one in three (30%) claimed to have switched accounts that either provide cashback rewards, bonuses, or lower fees. 

UK Savings Statistics 2023 - Saving Facts and Stats Report | money.co.uk