Can MSE put pressure on banks to PASS ON the interest rates to those with Savings Accounts?

Futuristic

The markets look pretty competitive to me, plenty of choices available. If you don't like the products your bank offers then its time to either switch completely out or transfer your funds elsewhere.

Also FCA already tried to do something about it: https://www.fca.org.uk/news/press-releases/action-plan-cash-savings

[Deleted User]

The big banks can offer low rate and get away with it.

Shop around for the best rates.

friolento

Zoe02 said:

The big banks can offer low rate and get away with it.

Shop around for the best rates.

I have Santander, Ulster, Cahoot with >5% easy access. I appreciate they are unusual and no longer available for new applications but if you keep your ear to the ground, you can get good deals even at some of the larger banks.

My top selection criteria is always the interest rate, not the size of the provider. If you make sure they have FSCS cover and if you stick to it, you can go with any provider.

35har1old

h1n1 said:

For too long, banks have been paying much below the BoE base-rate when it comes to interest for those with savings accounts. When the base-rate is increased, they almost instantly increase APR!
Savers are getting ripped off again... please can MSE put pressure on banks, like Barclay's to increase saving interest rates on par, or not far from, the BoE base-rate !  

All banks have one gimmick account paying close to base rate or above even Barclays

Hoenir

lr1277 said:

I have said this once before but think it bears repeating. Also mentioned by other posters on this thread.

Say 30 years ago I heard about a rule for bank managers and the rule probably applied maybe 20 years earlier (i.e. before the big bang in the City).

It was the 3-6-3 Rule.

Offer your savers 3%

Charge your mortgagees and lendees 6%

Be  on the golf course by 3pm.

That 3% dfference is how banks used to make money. Then the financial crash in 2008, with rates down to was it 0.25% or 0.5%?

The difference between the savings rate and the lending rate wasn't enough to allow the banks to make enough money to run their operations, so they started to cut costs.

Anyway we are here now.

I thought I would look at the mortgages rates for Ulster bank as they are offering 5.2% to savers in certain circumstances.

I attempted to create a dummy mortgage, which wasn't easy without giving personal details.

But there is some text at the bottom of the screen about fixed rates and tracker rates.

Fixed rates start at about 5.4%. But after the fix ends, they revert to 8%+.So a potential difference of 2.5%.

For their tracker rate, it is at 0.14% above Nat West's base rate of 5.25%. So a mortgage rate of 5.39%. So a difference of 0.19% between borrowers and savers.

Lets say 0.2% for ease of calculation.

So if Ulster bank lend £1M, they stand to make £2000 every year, not including defaults and other complications.

I suspect that is not enough to run a bank. Would you accept £2000 return on a £1M investment at current BoE base rates?

Just saying for savings rates to go up so would mortgage rates.

Edited to tweak a couple of words.

2nd edit: Look at the banks and building societies mortgage and savings rates. If there isn't at least 2-2.5% difference would you invest in them? Would you consider them a 'strong' institution?

And institutions that make money in other ways like car finance etc or they don't evey say how they make their money, I certainly wouldn't trust them.

Google Fractional Reserve Banking. Also Residential Mortgage-Backed Security (RMBS) . 

Days of £1 of deposit equalling £1 lent ended in the early 70's. 

Bradford and Bingley brought the US invention of RMBS to the UK in the late 90's. How they funded the intital BTL boom. Northern Rock took it to the next level. 

The general debate is far too simplistic. How the major banks fund themselves is extremely complex. Far removed from what people believe it to be. 

h1n1

subjecttocontract said:

Following your post I checked my savings. I have over 60% (£400K) earning over 5%. I consider that to be OK when base rates are 5.25%.

do you have that 400K all with one provider? 

h1n1

RG2015 said:

h1n1 said:

Bridlington1 said:

h1n1 said:

For too long, banks have been paying much below the BoE base-rate when it comes to interest for those with savings accounts. When the base-rate is increased, they almost instantly increase APR!
Savers are getting ripped off again... please can MSE put pressure on banks, like Barclay's to increase saving interest rates on par, or not far from, the BoE base-rate !  

Why should MSE put pressure on banks to increase savings interest rates? You're the one who chooses where you keep your savings, nobody forces you to stay with Barclays and as already mentioned there are many accounts on offer that pay 5%+. If you're not happy with the rate of interest you're currently getting on your savings then there are a couple of options:

1. Move your money to a better paying account. It's not difficult, just open a higher paying account and move your money into it.
2. If you can't be bothered to do the above then it can't be that much of an issue to you can it? Otherwise you'd be prepared to take your money elsewhere so stop moaning. It's your own fault if you choose to keep your money in a low paying account when there are plenty of better paying alternatives available.

Savers are not getting ripped off. Those who actively look for better savings rates and are prepared to move their money every now and then earn a higher rate of interest than those who can't be bothered to review their savings options regularly. This seems fair enough to me.

Its not that I cant be bothered, but have much more over the 85K safety net; Barclays is much more stable than Virgin Money - if I were to transfer I'd have to transfer it all there. However, I am reluctant too incase they fail. I know Barclays could fail but they seem in a much stronger position than Virgin Money, who BTW are offering 5.25% saving rates ... if they can do it, I can't see why Barclays can't better their offer at the very least !! 

You say Barclays is much more stable than Virgin Money. I am not sure that I understand what you mean, but let's say that they are more stable because they are more profitable.

Perhaps they are more profitable because savers like you keep more then £85k with them at low savings rates.

I am cautious having my money in Virgin as if they were to fail, then I'd lose a lot of money! I am not sure of how strong their business is. Others have said they go through rigorous testing ... but I dont know. 

Also I am considering another point. Yes 5.25% for 12 months is more. However, is it better to go with a slightly lower interest rate, 4.45% if this is going to be for 18 months with money being able to be added. 
Whereas Virgin Money is as is ... 

[Deleted User]

friolento said:

Zoe02 said:

The big banks can offer low rate and get away with it.

Shop around for the best rates.

I have Santander, Ulster, Cahoot with >5% easy access. I appreciate they are unusual and no longer available for new applications but if you keep your ear to the ground, you can get good deals even at some of the larger banks.

My top selection criteria is always the interest rate, not the size of the provider. If you make sure they have FSCS cover and if you stick to it, you can go with any provider.

I agree. I also have the Sandblaster account which is not common for a major bank to pay 5.08%.

I am not bothered by the size but the interest rate been offered, I have accounts with Chip and Tandem, prior to shopping around never heard of Chip or Tandem before. 

oldernonethewiser

h1n1 said:

RG2015 said:

h1n1 said:

Bridlington1 said:

h1n1 said:

For too long, banks have been paying much below the BoE base-rate when it comes to interest for those with savings accounts. When the base-rate is increased, they almost instantly increase APR!
Savers are getting ripped off again... please can MSE put pressure on banks, like Barclay's to increase saving interest rates on par, or not far from, the BoE base-rate !  

Why should MSE put pressure on banks to increase savings interest rates? You're the one who chooses where you keep your savings, nobody forces you to stay with Barclays and as already mentioned there are many accounts on offer that pay 5%+. If you're not happy with the rate of interest you're currently getting on your savings then there are a couple of options:

1. Move your money to a better paying account. It's not difficult, just open a higher paying account and move your money into it.
2. If you can't be bothered to do the above then it can't be that much of an issue to you can it? Otherwise you'd be prepared to take your money elsewhere so stop moaning. It's your own fault if you choose to keep your money in a low paying account when there are plenty of better paying alternatives available.

Savers are not getting ripped off. Those who actively look for better savings rates and are prepared to move their money every now and then earn a higher rate of interest than those who can't be bothered to review their savings options regularly. This seems fair enough to me.

Its not that I cant be bothered, but have much more over the 85K safety net; Barclays is much more stable than Virgin Money - if I were to transfer I'd have to transfer it all there. However, I am reluctant too incase they fail. I know Barclays could fail but they seem in a much stronger position than Virgin Money, who BTW are offering 5.25% saving rates ... if they can do it, I can't see why Barclays can't better their offer at the very least !! 

You say Barclays is much more stable than Virgin Money. I am not sure that I understand what you mean, but let's say that they are more stable because they are more profitable.

Perhaps they are more profitable because savers like you keep more then £85k with them at low savings rates.

I am cautious having my money in Virgin as if they were to fail, then I'd lose a lot of money! I am not sure of how strong their business is. Others have said they go through rigorous testing ... but I dont know. 

Also I am considering another point. Yes 5.25% for 12 months is more. However, is it better to go with a slightly lower interest rate, 4.45% if this is going to be for 18 months with money being able to be added. 
Whereas Virgin Money is as is ... 

As long as the amount was within the protected limit you wouldn't lose any money.

Ozzig

Another vote for moving money out of Barclays from me. I've shifted most of mine from there over the past 24 months into various other banks getting much better returns than Barclays has ever offered me!