Newcastle Building Society - Base Rate Tracker Savings account

OCCAM

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.

phillw

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

When will the rate change happen on my Base Rate Tracker mortgage?

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.

happybagger

OCCAM said:

 So, to me this seems just another example of sharp practice from a banking/savings institution.

It's in clear open sight in the key features document "What is the interest rate?" so I think describing it as "sharp practice" is not justified

eskbanker

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

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.

housebuyer143

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.

Ayr_Rage

LOL, another case of "I'll have a moan because I didn't read the Ts and Cs!

nic_c

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.

searching4bestrates

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

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

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.