MSE News: Savers getting a raw deal as MSE data reveals banks have failed to pass on November's...

edited 20 June 2018 at 4:55PM in Savings & Investments
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Former_MSE_KarlFormer_MSE_Karl Former MSE
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edited 20 June 2018 at 4:55PM in Savings & Investments
Savers getting a raw deal as MSE data reveals banks have failed to pass on November's base rate rise...
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'Savers getting a raw deal as MSE data reveals banks have failed to pass on November's base rate rise'
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  • Paul_DNAPPaul_DNAP Forumite
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    Indeed, anyone who has had the misfortune to try and rehome any previous fixed-rate savings products could have told you that there is no competition or drive in the savers market at all. When I took out my previous 5year ISA I had to rehome it from 4.5% to a 3%, and this month it's gone into a 2.05% and I can't believe how pleased I was to find that extra 0.5.
    (Although I could be wrong, I often am.)
  • Yorkshire_PudYorkshire_Pud Forumite
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    Government policies are behing the reasons savings interest rates are so low (and tax free whoopee) and the government wants it this way.
  • bristolleedsfanbristolleedsfan Forumite
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    I thought my eyes were playing tricks when they appeared to see a news story in June 2018 relating to "November" :)

    I would have thought more appropriate for such a thread on 19th June 2018 would be related to number of savings accounts that either have been reduced or are being reduced on 1 July in some cases by 0.25% despite no base rate reduction since …:(
  • LHW99LHW99 Forumite
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    Hadly news that morgage and loan rates go up as soon as base rate increases, but savings rates don't - or that savings rates fall when base rate goes down, but loans / mortgages don't follow quickly / at all.
  • VT82VT82 Forumite
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    Chart would be more compelling if it went back further before the Bank rate rise. Maybe providers knew it was going to go up, so priced it into their products early knowing they wouldn't be passing on the rise, hence no apparent increase in best buy rates? I bet if you went back a year they would be looking higher since the rate rise.


    And in terms of average rates, certainly amongst building societies (banks' instant access rates now seemed destined to always be abysmal), they are higher now.
  • robin58robin58 Forumite
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    Figured this 'news' within 6 weeks of the rise.

    So why has it taken MSE so long to suss this out?
    The more I live, the more I learn.
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    How little I know.!! ;)
  • ThrugelmirThrugelmir Forumite
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    Shows how little Karl at MSE knows about running a bank........

    If only business were so simple.

    Better to ask the question why do people buy Iphones when Apple makes over a 50% gross margin on selling them......... More profitable than banking.
    Real insurance claim quote : -

    "Going to work at 7am this morning I drove out of my drive straight into a bus. The bus was 5 minutes early.".
  • bioboybillbioboybill Forumite
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    In other news.....the sky is blue.:D
  • bowlhead99bowlhead99 Forumite
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    VT82 wrote: »
    Chart would be more compelling if it went back further before the Bank rate rise. Maybe providers knew it was going to go up, so priced it into their products early knowing they wouldn't be passing on the rise, hence no apparent increase in best buy rates? I bet if you went back a year they would be looking higher since the rate rise.

    And in terms of average rates, certainly amongst building societies (banks' instant access rates now seemed destined to always be abysmal), they are higher now.
    Yes, you can see on the chart that the best buy rate at the time of the rise was higher than it had been in late October. The banks knew the rise was pretty much inevitable sooner or later and had been ticking some of their rates up in competition with each other, in anticipation.

    Savings rates are not hooked to base rates (as you can see from the fact that the lines in the chart are not flat) and we didn't hear many complaining back in 2009 when base rate fell to 0.5% and banks and building societies failed to slash their rates by the same fraction immediately. It's often quite good for us that the banks take note of what their competition is doing rather than just slap the rates up and down where they see the central bank make a change.

    Meanwhile, on the comment that they always put rates up immediately: I signed mortgage paperwork in October last year for a five year fix and then while waiting for completion was able to go back to Nationwide on the day of the rate change and have the rate adjusted downwards for me by 0.05%, because they actually *dropped* their fixed rate at my LTV for customers getting fixed rate mortgage offers that month.

    Clearly if you choose not to take a deal to fix your mortgage for a guaranteed term and instead accept that your rate will be "base rate plus x" or a "standard variable rate" you can't expect the rate to stay constant while base rate is rising. You know it's up to you to sign up to a fix if that's what you want. In the world of savings, likewise you can sign for fixes if you want some certainty - but the banks are under no obligation to offer better fixes and new versions of existing products just because government or treasury or BoE make some change.
  • jimjamesjimjames Forumite
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    Equally my accounts didnt decrease or increase when the base rate dropped and rose again. They paid the same rate all the way through but maybe that's because I choose decent paying accounts not leaving money at 0.1%. I don't believe any of the best payers changed rates during that time.
    Remember the saying: if it looks too good to be true it almost certainly is.
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