Government is asking banks to up savings interest rates and be fair?

wmb194

Exodi said:

I think people are only focusing on one part of the issue in this thread - the point about banks allowing people to wallow in historic 0.1% AER accounts (and the moral arguments of whose responsibility it is).

The biggest issue, that I think the government was focused on, was why the banks seem quicker to increase mortgage rates, than savings rates.

As can be seen in the below - the difference between mortgages and savings at the end of 2021 was about 2%, it's now double that. In a Utopian world these two lines should be the same shape, running parallel to each other, with the gap being the banks margin. It doesn't seem an unreasonable accusation that the banks are quick to hike mortgage rates, but not so quick to do the same for savings - look at now...

Averages can conceal as much as they reveal - we all know we can do better than 2.49% - but if you could plot two year fixed rate savings bonds how would it look? Far less dramatic given that you can find c.6% without much difficulty: this even includes a big boy with NatWest offering 5.6% <£100k and 5.9% >£100k.

Zanderman

Exodi said:

I think people are only focusing on one part of the issue in this thread - the point about banks allowing people to wallow in historic 0.1% AER accounts (and the moral arguments of whose responsibility it is).

The biggest issue, that I think the government was focused on, was why the banks seem quicker to increase mortgage rates, than savings rates.

As can be seen in the below - the difference between mortgages and savings at the end of 2021 was about 2%, it's now double that. In a Utopian world these two lines should be the same shape, running parallel to each other, with the constant gap being the banks margin. It doesn't seem an unreasonable accusation that the banks are quicker to hike mortgage rates than savings - look at present.

Obviously there are better easy access products available than the 2.49% average below, as there are for mortgages.

The answer to that 'biggest issue' has been addressed several times - it's simply that banks are there to make money, not give it away.

This isn't a utopian world, and yes, clearly the banks can be accused, perfectly accurately (no one's disputing this are they?), of being quicker to hike loan rates than savings rates. That's to be expected, not to be surprised about. 

As for the government being 'focussed' on this issue - they're not. The government announcement was just PR - they are just playing to the audience. 

Exodi

wmb194 said:

Exodi said:

I think people are only focusing on one part of the issue in this thread - the point about banks allowing people to wallow in historic 0.1% AER accounts (and the moral arguments of whose responsibility it is).

The biggest issue, that I think the government was focused on, was why the banks seem quicker to increase mortgage rates, than savings rates.

As can be seen in the below - the difference between mortgages and savings at the end of 2021 was about 2%, it's now double that. In a Utopian world these two lines should be the same shape, running parallel to each other, with the gap being the banks margin. It doesn't seem an unreasonable accusation that the banks are quick to hike mortgage rates, but not so quick to do the same for savings - look at now...

Averages can conceal as much as they reveal - we all know we can do better than 2.49% - but if you could plot two year fixed rate savings bonds how would it look? Far less dramatic given that you can find c.6% without much difficulty: this even includes a big boy with NatWest offering 5.6% <£100k and 5.9% >£100k.

<snip long table from moneyfacts>

I somewhat predicted the response of 'you can do better than the average of 2.49%' but I think I edited the post too late. Obviously you can do better than the average mortgage rate also, but I take your point.

Zanderman said:

Exodi said:

I think people are only focusing on one part of the issue in this thread - the point about banks allowing people to wallow in historic 0.1% AER accounts (and the moral arguments of whose responsibility it is).

The biggest issue, that I think the government was focused on, was why the banks seem quicker to increase mortgage rates, than savings rates.

As can be seen in the below - the difference between mortgages and savings at the end of 2021 was about 2%, it's now double that. In a Utopian world these two lines should be the same shape, running parallel to each other, with the constant gap being the banks margin. It doesn't seem an unreasonable accusation that the banks are quicker to hike mortgage rates than savings - look at present.

Obviously there are better easy access products available than the 2.49% average below, as there are for mortgages.

The answer to that 'biggest issue' has been addressed several times - it's simply that banks are there to make money, not give it away.

This isn't a utopian world, and yes, clearly the banks can be accused, perfectly accurately (no one's disputing this are they?), of being quicker to hike loan rates than savings rates. That's to be expected, not to be surprised about. 

As for the government being 'focussed' on this issue - they're not. The government announcement was just PR - they are just playing to the audience. 

For the record, I don't disagree at all - and I find it puzzling that the government is intervening in this way... we actually share identical views from reading your posts on this thread. My point was that the government intervention is focused on this, and not the red herring being focused on in this thread of 'some accounts pay 0.1% AER - should the banks be forced to increase these rates'.

Please don't put words in my mouth - I didn't suggest the government was focusing on this issue, as there is clearly a million and one more important priorities for the government. I said that within this particular issue, the government was primarily focused on the issue of the gap between loan and savings rates.