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  • FIRST POST
    • Phil27356
    • By Phil27356 28th Feb 18, 12:36 PM
    • 12Posts
    • 3Thanks
    Phil27356
    Unexpected interest rate reduction
    • #1
    • 28th Feb 18, 12:36 PM
    Unexpected interest rate reduction 28th Feb 18 at 12:36 PM
    Just received this from the Coventry Building Society:

    This email is to let you know that we’re reducing the variable interest rate on this [30 day notice] account with effect from 16 March 2018.
    We realise that this isn’t good news for savers. However, as mortgage rates have continued to remain low, we’ve regretfully had to make the difficult decision to reduce the interest rates on some of our savings accounts.
    What this means
    As at the date of this email, the balance of this account was earning a variable rate of 1.49% gross p.a.** and from 16 March 2018 the new variable interest rate will be 1.34% gross p.a.

    Granted that as an relatively easy access account the rate doesn't appear too bad but I thought the current trend was for interest rates to go up! in fact this account saw an interest rate rise in Nov 17.
    Anybody out there with this account thinking of moving elsewhere, or already getting anything better (with full protection)?

    Thanks
Page 3
    • Broadwood
    • By Broadwood 3rd Mar 18, 9:52 PM
    • 640 Posts
    • 628 Thanks
    Broadwood
    More guessing based on absolutely no evidence whatsoever.
    Originally posted by IanManc
    Here's a suggestion and I'll do the same.

    Ask half a dozen friends or relatives (who are similarly interested in finances like we are to be on here in the first place) the following question :-

    "Out of the 1.7 million people on these forums.....How likely is it that at least 100 people have £85k or more deposited with Coventry BS ?"

    We'll compare results in a few days time?
    • ValiantSon
    • By ValiantSon 3rd Mar 18, 10:25 PM
    • 1,877 Posts
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    ValiantSon
    Here's a suggestion and I'll do the same.

    Ask half a dozen friends or relatives (who are similarly interested in finances like we are to be on here in the first place) the following question :-

    "Out of the 1.7 million people on these forums.....How likely is it that at least 100 people have £85k or more deposited with Coventry BS ?"

    We'll compare results in a few days time?
    Originally posted by Broadwood
    Doing so will prove absolutely nothing! Anecdotal evidence is worthless.
    • Broadwood
    • By Broadwood 3rd Mar 18, 10:34 PM
    • 640 Posts
    • 628 Thanks
    Broadwood
    Doing so will prove absolutely nothing! Anecdotal evidence is worthless.
    Originally posted by ValiantSon
    No doubt they would refuse to answer, but it's a pity The Coventry wont say how many of their 1.5 million savers have £85k or more invested with them.

    I bet it's more than you think. But we'll probably never know.
    • bowlhead99
    • By bowlhead99 3rd Mar 18, 10:40 PM
    • 7,834 Posts
    • 14,310 Thanks
    bowlhead99
    Here's a suggestion and I'll do the same.

    Ask half a dozen friends or relatives (who are similarly interested in finances like we are to be on here in the first place) the following question :-
    Originally posted by Broadwood
    We'll compare results in a few days time?
    Unfortunately I don't think as many as half a dozen of my friends are interested enough in personal finance to be on a forum such as this.

    But if I can find some, just to clarify, the series of questions to pose to them is "Out of the 1.7 million user accounts which were registered on the MSE forums in the fifteen years since February 2003, how many of them are separate unique individuals?

    And of those number, how many of them are still active users of the forum site in March 2018?

    And of those, how many of them regularly read the Savings & Investments Board?

    And of those, how many have £85,000 or more deposited with a single financial institution?

    And of those, how many would say that financial institution is Coventry BS?

    And of those, how many would be motivated to withdraw their funds from Coventry BS on the suggestion of an anonymous fellow user of the MSE Savings & Investments board who believes that despite them offering some leading accounts and providing decent customer service, they should be dumped for not offering an interest rate that equals inflation throughout all market conditions because it's shocking for them to reduce rates below what that user believes they should be.

    And would that amount of users leaving Coventry in the same week cause Coventry (with its £40bn of assets) significant distress?

    Please show your workings because I have to compare notes with Broadwood by next weekend..."

    No doubt they would refuse to answer, but it's a pity The Coventry wont say how many of their 1.5 million savers have £85k or more invested with them.
    Originally posted by Broadwood
    ... And have MSE Savings & Investment forum membership... and are motivated to move accounts from time to time by peer pressure.
    I bet it's more than you think. But we'll probably never know.
    I bet it's exactly as many as I think because I'm really good at guessing. But we'll never know because I refuse to answer.
    Last edited by bowlhead99; 03-03-2018 at 10:54 PM.
    • ValiantSon
    • By ValiantSon 3rd Mar 18, 10:48 PM
    • 1,877 Posts
    • 1,740 Thanks
    ValiantSon
    No doubt they would refuse to answer, but it's a pity The Coventry wont say how many of their 1.5 million savers have £85k or more invested with them.

    I bet it's more than you think. But we'll probably never know.
    Originally posted by Broadwood
    This is still just wild speculation on your part.
    • jimjames
    • By jimjames 3rd Mar 18, 11:53 PM
    • 12,586 Posts
    • 11,233 Thanks
    jimjames
    I bet it's exactly as many as I think because I'm really good at guessing. But we'll never know because I refuse to answer.
    Originally posted by bowlhead99
    I'll have a guess. I think it's a (very) round number...
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Phil27356
    • By Phil27356 4th Mar 18, 2:35 PM
    • 12 Posts
    • 3 Thanks
    Phil27356
    Mass ditch and switch from The Coventry to somewhere better ?

    What date shall we do it ?

    These are serious questions by the way.
    Originally posted by Broadwood
    Not a serious question that I shall beconsidering - having several other accounts with the Cov
    • Phil27356
    • By Phil27356 5th Mar 18, 11:20 AM
    • 12 Posts
    • 3 Thanks
    Phil27356
    OK, so perhaps I should have been a little bit clearer in the objectives of my original post: [And perhaps my own mind]
    I have no desire to know how many savers (friends, family or otherwise) have more than 85K invested with The Coventry; that is their business and quite rightly confidential. I also have absolutely no interest in becoming a financial activist and trying to shame, cause fiscal panic or anything like to The Coventry.
    There are undoubtedly [good] reasons why The Coventry is one of the biggest Building Societies in the UK with +£40Bn assets. I am wondering why exactly, after posting such positive Year end results* only recently, they deemed it necessary to reduce recent interest rate rises against the BoE trend. That said, The Coventry, and others, may feel that they still offer very competitive and attractive savers' rates, but others may feel they can find something a little bit better out there (with exact same risk). We are only a matter of weeks before the new financial year and ISA allowances commence. I am hoping for some favourable rates to be announced soon, which will hopefully compensate for the drop in the Easy Access rate.

    In a nutshell: Is there anything now out there to rival The Coventry on their Easy Access 30 day notice Saver without exposure to any greater risk?
    Why this reduction? Were The Coventry perhaps over generous with their interest rate rise in the first place and now trying to readjust?


    https://www.coventrybuildingsociety.co.uk/content/dam/cbs/consumer/pdf/get-in-touch/media-centre/2017_Year_End_Financial_Results_News_Release.pdf
    • nbrewitt
    • By nbrewitt 5th Mar 18, 12:30 PM
    • 41 Posts
    • 22 Thanks
    nbrewitt
    Coventry BS
    Very disappointed with the latest news from the Coventry, I've been singing their praises for years about them being a bit different and more customer focused and they go and pull a stunt like this when the general trend is for rates to be on the move upwards. Having said that, their rates are still competitive although it has dulled my opinion of them somewhat.
    • AndyPK
    • By AndyPK 5th Mar 18, 12:31 PM
    • 2,834 Posts
    • 786 Thanks
    AndyPK
    Sorry it was my fault!


    After they increased the rate a few months ago, I realised it wasn't a bad account.


    That combined with regular savers getting worse, (can't pay as much in etc)
    I started to pay money into the Cov. which I hadn't done in some time.




    I wonder if others did the same.
    Last edited by AndyPK; 05-03-2018 at 7:37 PM.
    • bowlhead99
    • By bowlhead99 5th Mar 18, 12:49 PM
    • 7,834 Posts
    • 14,310 Thanks
    bowlhead99
    I am wondering why exactly, after posting such positive Year end results* only recently, they deemed it necessary to reduce recent interest rate rises against the BoE trend.
    Originally posted by Phil27356
    It's not really just the published BoE base rate but other factors too, and the players in the savings and borrowings markets are not guided by just what BoE does but what they each do. There are also things in the background like Funding for Lending scheme and Term Funding Scheme which can mess with the rates that banks and building societies are willing to lend at and borrow at.

    When cheap government finance gets withdrawn you might think the banks would all scramble to improve rates to compete for more customer deposits to replace the government funding they lost. But in some cases they will think OK we just lost lots of bank funding at 0.5%, and we are still trying to lend competitively on mortgages but we can't do that if our funding is now coming from savers at 1.6% instead of the central bank 'free money' gravy train at 0.5%...

    That said, The Coventry, and others, may feel that they still offer very competitive and attractive savers' rates
    They do still have decent rates in the market across various products. 'Challenger bank' Aldermore is only just over 1% for their 30 day access. But you can't expect one business to be at top rates on all products, or one business to retain 'top rate' status all the time on a particular product. They need to take the foot off the gas every so often to batten down the hatches for some periods which are less kind to them.
    In a nutshell: Is there anything now out there to rival The Coventry on their Easy Access 30 day notice Saver without exposure to any greater risk?
    Will leave for someone else to answer!
    Why this reduction? Were The Coventry perhaps over generous with their interest rate rise in the first place and now trying to readjust?
    If it was the best rate in town then yes it was over-generous rather than heing the right amount of generous. Paying the very best rates (as well as still loaning at decent rates) is not something that's sustainable unless you have absolutely the lowest costs and best infrastructure in the industry; you wouldn't expect one group to be perpetually the best. Generally each of the decent providers will have their time in the sun and then let someone take over at being the 'best' for that type of account for a bit, depending on their appetite for new customers of different types on both the saving and borrowing side.

    The year end results are about what profits they made (past tense) over the course of the year, which won't always translate to what they will make next if they keep the same customer profile and borrowing costs and account terms that existed on the last day of the year.
    • ValiantSon
    • By ValiantSon 5th Mar 18, 4:22 PM
    • 1,877 Posts
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    ValiantSon
    Very disappointed with the latest news from the Coventry, I've been singing their praises for years about them being a bit different and more customer focused and they go and pull a stunt like this when the general trend is for rates to be on the move upwards. Having said that, their rates are still competitive although it has dulled my opinion of them somewhat.
    Originally posted by nbrewitt
    I've seen several comments now about the upwards trend in interest rates, but no evidence provided to support this view. By contrast, in the same week that Coventry reduced their rates, so too did the market leading easy access accounts from ICICI Bank (down from 1.35% to 1.3%) and Tesco (down from 1.3% to 1.26%). The evidence looks to me more like rates are not rising, but contracting. A positive change in the BoE base rate does not necessarily translate to a positive change in retail rates.

    The one contrast to the above is with Nationwide's new ISAs, but these are still not that impressive when compared with non-ISA accounts.

    I understand people's disappointment with the recent decision by Coventry BS, but feel that some of the comments on it are not entirely fair given the wider context of the market place, and the fact that many of their accounts are still fairly competitive.
    • Loanranger
    • By Loanranger 5th Mar 18, 4:50 PM
    • 2,106 Posts
    • 5,523 Thanks
    Loanranger
    I agree with ValientSon.
    People are very quick to condemn but noticeably slow to praise. I shan't be leaving the Coventry any time soon. No sooner have you taken the trouble to move your cash elsewhere then elsewhere will be lowering their rates, too.
    As for not trusting them... what a sad life it must be if a building society such as the Coventry are to be lumped in with the likes of the commercial players who are in to make a profit for their shareholders.
    • Fed
    • By Fed 5th Mar 18, 5:16 PM
    • 82 Posts
    • 41 Thanks
    Fed
    Same here which is a shame because Coventry have been great, despite having the account for years the rate on my online saver has always exceeded the best on offer elsewhere. Now it's similar, not worth the hassle moving though
    • Stubod
    • By Stubod 5th Mar 18, 5:35 PM
    • 480 Posts
    • 328 Thanks
    Stubod
    ..I was all up for moving when I received the notification, however I can't find a better rate for instant access at the mo.... ....
    • Phil27356
    • By Phil27356 5th Mar 18, 5:40 PM
    • 12 Posts
    • 3 Thanks
    Phil27356
    Mass ditch and switch from The Coventry to somewhere better ?

    What date shall we do it ?

    These are serious questions by the way.
    Originally posted by Broadwood
    I agree with ValientSon.
    People are very quick to condemn but noticeably slow to praise. I shan't be leaving the Coventry any time soon. No sooner have you taken the trouble to move your cash elsewhere then elsewhere will be lowering their rates, too.
    As for not trusting them... what a sad life it must be if a building society such as the Coventry are to be lumped in with the likes of the commercial players who are in to make a profit for their shareholders.
    Originally posted by Loanranger
    I, as the OP in no way was either condemning nor lumping the Coventry in with any "commercial players". And, I don't think the word 'Trust' [or lack of it] ever came up in replies.
    There have been several good factual replies in answer to my original post, which I appreciate. I also appreciate that there will be people out there who will perhaps be slightly more aggrieved with The Coventry's decision. I too have multiple accounts with The Coventry and have [as per
    Loanranger;73978847] absolutely no intention of leaving them. That said, I am prepared to move some Coventry money around if I can eke out a little extra for little or no effort.

    [Apologies is this reply is in wrong place/format]
    • Speculator
    • By Speculator 5th Mar 18, 9:17 PM
    • 1,770 Posts
    • 1,374 Thanks
    Speculator
    Former Stroud Reg Saver
    This account was paying 3% until just before the base rate rise when it was reduced to 2.75% for some reason.

    Then after the base rate rose to 0.5%, the account went back up to 3%.

    Now its back down to 2.80% probably in anticipation of another BOE rate rise.
    • HUMBUG
    • By HUMBUG 8th Mar 18, 9:38 PM
    • 153 Posts
    • 32 Thanks
    HUMBUG
    So this is the reason why Coventry BS has been able to reduce their savings rates. Banks and building societies 'gorged' themselves on BOE funds (TFS scheme) before it was closed at the end of 2017.

    https://www.telegraph.co.uk/business/2018/03/01/lenders-gorge-cheap-bank-england-funds-cut-off-date/

    "TSB, Yorkshire Building Society, Metro Bank and Coventry Building Society all drew down more than a billion pounds apiece in the period".

    Obviously trying to get people roped into fixed rate mortgages at low rates before financial year end and then double-whammy them next year when interest rates go up. In the meantime, we savers suffer more manipulated low rates ( 10 years and counting - lost an absolute fortune- robbery by stealth by Govt and BOE & Co). Impact of inflation on savings has also taken a big toll.
    • ValiantSon
    • By ValiantSon 8th Mar 18, 9:42 PM
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    • 1,740 Thanks
    ValiantSon
    So this is the reason why Coventry BS has been able to reduce their savings rates. Banks and building societies 'gorged' themselves on BOE funds (TFS scheme) before it was closed at the end of 2017.

    https://www.telegraph.co.uk/business/2018/03/01/lenders-gorge-cheap-bank-england-funds-cut-off-date/

    "TSB, Yorkshire Building Society, Metro Bank and Coventry Building Society all drew down more than a billion pounds apiece in the period".

    Obviously trying to get people roped into fixed rate mortgages at low rates before financial year end and then double-whammy them next year when interest rates go up. In the meantime, we savers suffer more manipulated low rates ( 10 years and counting - lost an absolute fortune- robbery by stealth by Govt and BOE & Co). Impact of inflation on savings has also taken a big toll.
    Originally posted by HUMBUG
    You'd have a lot more reason to complain if the country had entered a period of deep and sustained recession because there was very little available credit.

    If you want better returns in the long run then you should consider investments, rather than cash savings.
    • bowlhead99
    • By bowlhead99 8th Mar 18, 10:06 PM
    • 7,834 Posts
    • 14,310 Thanks
    bowlhead99
    So this is the reason why Coventry BS has been able to reduce their savings rates. Banks and building societies 'gorged' themselves on BOE funds (TFS scheme) before it was closed at the end of 2017.
    Originally posted by HUMBUG
    However if you read the actual published facts and the less-sensationalist headlines, you can see that the financial institutions left money on the table and didn't choose to draw down as much cheap funding as the government was offering. They only borrowed what they thought was prudent given their business models.
    Example:
    http://www.cityam.com/281504/banks-leave-gbp13bn-cheap-money-term-funding-scheme-table

    In the meantime, we savers suffer more manipulated low rates ( 10 years and counting - lost an absolute fortune- robbery by stealth by Govt and BOE & Co). Impact of inflation on savings has also taken a big toll.
    Inflation has been relatively benign in the last decade compared to previous decades (perhaps your talk of manipulated low rates for over ten years really just means eight or nine years when the base rates hit the floor, as ten years ago they were fine).

    Putting all your life savings in cash and then "losing an absolute fortune" to inflation probably implies you weren't as smart as you should have been and didn't hold any 'investments', only a big pile of cash. So, if you have lost such a fortune:

    a) you should probably count yourself lucky that you had a fortune in ready cash. Most of us are not so fortunate as to have a fortune in cash;

    b) maybe take some responsibility for your own situation yourself. Nobody owes you a living and if you had all your money in cash to watch it get eroded by inflation you should probably reflect on that and wonder why you didn't spread your assets across cash and diversified investment funds.
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