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

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.

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.