Newcastle Building Society - Base Rate Tracker Savings account

This savings account commits to keep its interest rate at 0.7 percentage points below the bank of England Base Rate. However, all is not as it seems. Rather than being a true tracker it is more of a tracker with a "up to 5 working days" lag!
BoE base rate changed last Thursday 3rd August, the interest rate on the account remains the same still as of today 9th August. Tomorrow 10th August will be the 5 working days since the BoE rate change.
A true "tracker" would have changed in concert with the BoE change, with no delay. So, to me this seems just another example of sharp practice from a banking/savings institution.

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Comments

  • phillw
    phillw Posts: 5,656 Forumite
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    edited 9 August 2023 at 12:52PM
    I guess tracker mortgages aren't true trackers either

    https://www.nationwide.co.uk/mortgages/bank-of-england-base-rate-changes-and-your-mortgage/

    The new Bank of England base rate

    The latest Bank of England base rate is: 5.25%.

    This is an increase of 0.25%, and was announced by the Bank of England (BoE) on 3 August 2023.

    From 1 September 2023 our:

    • Base Mortgage Rate (BMR) will increase from 6.50% to 6.75%
    • Tracker mortgage rates will increase in line with the base rate.

    https://www.skipton.co.uk/base-rate-change

    If your Base Rate Tracker was taken out with Skipton Building Society, the new rate will take effect from 17 August 2023.

    If your Base Rate Tracker was originally from Scarborough Building Society, the new rate will take effect from 10 August 2023.

    If your Base Rate Tracker was originally from Amber Homeloans or North Yorkshire Mortgages, the new rate will take effect from 3 August 2023.


  • eskbanker
    eskbanker Posts: 36,740 Forumite
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    OCCAM said:
    This savings account commits to keep its interest rate at 0.7 percentage points below the bank of England Base Rate. However, all is not as it seems. Rather than being a true tracker it is more of a tracker with a "up to 5 working days" lag!
    BoE base rate changed last Thursday 3rd August, the interest rate on the account remains the same still as of today 9th August. Tomorrow 10th August will be the 5 working days since the BoE rate change.
    A true "tracker" would have changed in concert with the BoE change, with no delay. So, to me this seems just another example of sharp practice from a banking/savings institution.
    Can't see the problem myself, as long as the same principle is applied to rate reductions - the commitment is to track a rate, not to do so instantaneously.  I don't think there are many tracker products on the market, are you aware of any that act in the way you'd wish?  Skipton, for example, states they'll react 'within 14 days'....
  • QrizB
    QrizB Posts: 16,870 Forumite
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    OCCAM said:
    So, to me this seems just another example of sharp practice from a banking/savings institution.
    What you lose on the way up, you gain back on the way down.
    If there was a 25bp increase to the BoE base rate every month for a year, your effective loss for the year would be about 6bp.

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  • housebuyer143
    housebuyer143 Posts: 4,191 Forumite
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    edited 9 August 2023 at 1:09PM
    Skipton make you wait 14 days on their tracker savings account. I thought 5 days was reasonable. You can be sure though if base rate goes down that they will action it in day 1.
  • PixelPound
    PixelPound Posts: 3,047 Forumite
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    OCCAM said:
    This savings account commits to keep its interest rate at 0.7 percentage points below the bank of England Base Rate. However, all is not as it seems. Rather than being a true tracker it is more of a tracker with a "up to 5 working days" lag!
    BoE base rate changed last Thursday 3rd August, the interest rate on the account remains the same still as of today 9th August. Tomorrow 10th August will be the 5 working days since the BoE rate change.
    A true "tracker" would have changed in concert with the BoE change, with no delay. So, to me this seems just another example of sharp practice from a banking/savings institution.

    Given that all the top 11 EA that can be opened are all above the BoE-0.7% mark
    https://forums.moneysavingexpert.com/discussion/6392978/top-easy-access-acs-ranked-top-of-the-pots-no-chat/p1
    As are accounts that are being dropped from that list.

    Then not sure how competitive the NBS offering is any more.

  • Although not a market leading rate (even after the BR increase is applied) the account has value to me, especially if/when rates go down.

    I personally didn't find a 5 working day lag to be too unreasonable.
  • MX5huggy
    MX5huggy Posts: 7,127 Forumite
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    QrizB said:
    OCCAM said:
    So, to me this seems just another example of sharp practice from a banking/savings institution.
    What you lose on the way up, you gain back on the way down.
    If there was a 25bp increase to the BoE base rate every month for a year, your effective loss for the year would be about 6bp.

    It’s not even that bad because the MPC only meets 8 times a year for the “monthly” meeting. 
  • bundoran
    bundoran Posts: 174 Forumite
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    OCCAM said:
    This savings account commits to keep its interest rate at 0.7 percentage points below the bank of England Base Rate. However, all is not as it seems. Rather than being a true tracker it is more of a tracker with a "up to 5 working days" lag!
    BoE base rate changed last Thursday 3rd August, the interest rate on the account remains the same still as of today 9th August. Tomorrow 10th August will be the 5 working days since the BoE rate change.
    A true "tracker" would have changed in concert with the BoE change, with no delay. So, to me this seems just another example of sharp practice from a banking/savings institution.

    I opened a Newcastle Base Rate Tracker account and I'm very happy with it. The account is operating exactly as I'd expected, because Newcastle are keeping to the terms and conditions I chose to sign up to.
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