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  • FIRST POST
    • polyphonic99
    • By polyphonic99 6th Aug 18, 11:12 PM
    • 45Posts
    • 25Thanks
    polyphonic99
    Nationwide after BoE Interest Rate rise
    • #1
    • 6th Aug 18, 11:12 PM
    Nationwide after BoE Interest Rate rise 6th Aug 18 at 11:12 PM
    Nationwide will not pass on full 0.25% interest rate rise to most savers

    https://www.theguardian.com/business/2018/aug/06/nationwide-will-not-pass-on-full-interest-rate-rise-to-most-savers


    Nationwide is not passing on last week's Bank of England 0.25% rate rise in full to savers in the first sign that big financial institutions will use the base rate to increase profit margins.

    The building society, one of the biggest mortgage and savings institutions in the UK, said that while its tracker mortgage customers will see a 0.25% rise in their payments, many of its savers will see only a 0.1% increase in rates.

    Thanks Nationwide, I will be moving any remaining money in my accounts with you just as soon as your competitors raise their rates by 0.25%, which for instance Skipton has already promised to do.
Page 1
    • mije1983
    • By mije1983 6th Aug 18, 11:22 PM
    • 3,543 Posts
    • 20,093 Thanks
    mije1983
    • #2
    • 6th Aug 18, 11:22 PM
    • #2
    • 6th Aug 18, 11:22 PM
    They won't be the only ones that don't increase savings accounts by 0.25%.

    Thanks Nationwide, I will be moving any remaining money in my accounts with you just as soon as your competitors raise their rates by 0.25%, which for instance Skipton has already promised to do.
    Originally posted by polyphonic99
    I won't be moving. They still have one of the market leading current accounts for the first year, and their RS is also one of the top ones. Both give 5% which is far in excess of most other lenders.

    They obviously don't have feel they have a need for extra cash at the moment, and that my above 2 points are enough for them not to need to increase rates across the board.

    • jsinc
    • By jsinc 6th Aug 18, 11:49 PM
    • 111 Posts
    • 47 Thanks
    jsinc
    • #3
    • 6th Aug 18, 11:49 PM
    • #3
    • 6th Aug 18, 11:49 PM
    To be fair most savings accounts aren't bank rate trackers. But the HTB ISA rate is apparently going up from 2% to 2.5%, so their priority should be clear if it wasn't already (the Mortgage Works). Nationwide's era as a society working to affordably finance/build members' housing ended a long time ago, as did any meaningful 'mutuality' across borrowers and lenders.
    • Malchester
    • By Malchester 7th Aug 18, 8:05 AM
    • 120 Posts
    • 75 Thanks
    Malchester
    • #4
    • 7th Aug 18, 8:05 AM
    • #4
    • 7th Aug 18, 8:05 AM
    Have become increasingly disenchanted with Nationwide over recent years now only have Flex and loyalty single access ISA with them. ISA will be moving soon when things settle. Have been with them over 30 years but they have no loyalty to me so why should I have any to them. Even their loyalty rates are appalling compared to othe financial instituions
    • Reed_Richards
    • By Reed_Richards 7th Aug 18, 8:09 AM
    • 121 Posts
    • 46 Thanks
    Reed_Richards
    • #5
    • 7th Aug 18, 8:09 AM
    • #5
    • 7th Aug 18, 8:09 AM
    Thanks Nationwide, I will be moving any remaining money in my accounts with you just as soon as your competitors raise their rates by 0.25%, which for instance Skipton has already promised to do.
    Originally posted by polyphonic99
    I suspect Nationwide will not be the only financial institution not to pass-on the full rate rise; they're just the first to own-up to this. I'm sure some institutions will claim they already increased their rates in anticipation of this change. And surely any decision to move should be based on what the rates actually are, not on by how much they have risen.
    Reed
    • Zanderman
    • By Zanderman 7th Aug 18, 8:48 AM
    • 1,767 Posts
    • 4,405 Thanks
    Zanderman
    • #6
    • 7th Aug 18, 8:48 AM
    • #6
    • 7th Aug 18, 8:48 AM
    Thanks Nationwide, I will be moving any remaining money in my accounts with you just as soon as your competitors raise their rates by 0.25%, which for instance Skipton has already promised to do.[/FONT]
    Originally posted by polyphonic99
    I suspect Nationwide will not be the only financial institution not to pass-on the full rate rise; they're just the first to own-up to this. I'm sure some institutions will claim they already increased their rates in anticipation of this change. And surely any decision to move should be based on what the rates actually are, not on by how much they have risen.
    Originally posted by Reed_Richards
    Indeed, it's the actual rate that's the issue, not how much it's gone up by, so polyphonic99's probably looking at the wrong measure if they simply want to move to accounts that rise by .25% - as many that don't will still be better. Nationwide will still have very competitive (some of the best available anywhere) rates, esp on the FlexDirect (1st year only) and the Reg Saver (ongoing)

    And, as others have pointed out, a BoE rate rise often isn't followed through, especially for savngs products where the rate is already much higher.
    • HappyHarry
    • By HappyHarry 7th Aug 18, 9:01 AM
    • 698 Posts
    • 1,039 Thanks
    HappyHarry
    • #7
    • 7th Aug 18, 9:01 AM
    • #7
    • 7th Aug 18, 9:01 AM
    This just shows how ten years of low interest rates changes the public perception of what to expect from deposit accounts.

    Traditionally, banks have lent out (in the form of mortgages and loans) at slightly above base rate, and borrowed (from savers) at slightly below base rates. The banks' profit has been made from that margin between the two rates.

    However, since the base rate has been under 1% for nearly ten years, the banks have been unable to borrow from savers at such low rates, and have had to both lend and borrow at above base rates.

    Now that the base rate is starting to increase, the public expects that all base rate rises should be expected to be reflected in both the banks' borrowing and lending rates.

    Whereas in reality, the borrowing and lending rates will trend back to sitting just above and below the base rate.
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
    • bowlhead99
    • By bowlhead99 7th Aug 18, 9:08 AM
    • 8,171 Posts
    • 14,938 Thanks
    bowlhead99
    • #8
    • 7th Aug 18, 9:08 AM
    • #8
    • 7th Aug 18, 9:08 AM
    And surely any decision to move should be based on what the rates actually are, not on by how much they have risen.
    Originally posted by Reed_Richards
    True. Pick a financial institution and stay with it if it suits you to do so, or move if it suits you to do so. It doesn't really matter what the most recent change to that financial institution was; there may be another one within a year anyway, and you don't know if they will blindly follow that one or not, so what matters is the service they offer and the rates they offer

    Certainly in 2009 when the base rate fell to 0.5%, people like the OP wouldn't have been admonishing the [insert financial institution of choice] for failing to instantly "pass on" the full extent of the base rate change on their savings account. They were quite happy for their bank or building society to be aware of what their competition were doing and set their rates at levels which were judged to best meet the objectives of attracting sufficient deposits to continue to operate, and sufficient profit margin to build reserves to meet their business risk and regulatory requirements.

    I say "quite happy" - obviously they don't want financial institutions to make profits or grow their business in case it makes them 'lose touch' with customers, and they would still be moaning that the interest rates should be higher... but what I mean is they were happy for the rates not to instantly plummet to the floor to match the base rate. Yet now people think it's outrageous if savings rates don't match base rates tick for tick.

    ...while its tracker mortgage customers will see a 0.25% rise in their payments...
    because those tracker mortgage customers explicitly bought a financial product that tracks the base rate up and down, and it just went up by 0.25%...
    many of its savers will see only a 0.1% increase in rates.
    because the saving rates offered on their accounts are variable and can be changed from time to time at such times and amounts the financial institution would like to change them, with regard to factors such as profitability and whatever rival providers choose to offer.


    Personally, my Nationwide mortgage rate is fixed for several more years, while only one of my savings accounts (not a Nationwide one) is fixed. I'll deposit my spare money wherever I like, based on rates available and other factors; that's the same situation 'post base rate rise' as it was at any point in the past.
    • Malchester
    • By Malchester 7th Aug 18, 9:12 AM
    • 120 Posts
    • 75 Thanks
    Malchester
    • #9
    • 7th Aug 18, 9:12 AM
    • #9
    • 7th Aug 18, 9:12 AM
    Absolutely right. It's not how much rates go up or down that matters, it's what the rates actually are. Much better rates can be found from other financial institutions than Nationwide, even if they raised their rates by the full .25% or more. But there other factors as well, like ease of access, speed of easy access, how fast faster payments are processed etc !!!8230; To be fair to Nationwide they are excellent at processing faster payments (like Tesco Bank) unlike others where the process is much slower
    • d63
    • By d63 7th Aug 18, 9:44 AM
    • 24 Posts
    • 16 Thanks
    d63
    that the nationwide will not be raising its saving rates by much is not exactly surprising. (+0.1% on their 15year loyalty saver)
    what is so irritating is their outrageous "on your side, our only focus is you" attitude when they do it. (https://www.nationwide.co.uk/support/support-articles/services/savings-promises)
    to be mugged and have your wallet stolen is bad enough. when the mugger smiles when they do it is what makes the experience almost unbearable.
    sometimes i just want to scream.
    very loudly.
    • eskbanker
    • By eskbanker 7th Aug 18, 9:53 AM
    • 7,871 Posts
    • 8,725 Thanks
    eskbanker
    that the nationwide will not be raising its saving rates by much is not exactly surprising. (+0.1% on their 15year loyalty saver)
    what is so irritating is their outrageous "on your side, our only focus is you" attitude when they do it. (https://www.nationwide.co.uk/support/support-articles/services/savings-promises)
    to be mugged and have your wallet stolen is bad enough. when the mugger smiles when they do it is what makes the experience almost unbearable.
    sometimes i just want to scream.
    very loudly.
    Originally posted by d63
    Which of those seven published promises are you claiming they've broken?
    • DiggerUK
    • By DiggerUK 7th Aug 18, 9:56 AM
    • 3,042 Posts
    • 2,989 Thanks
    DiggerUK
    Wake up, the world changed after 2007
    ........Nationwide is not passing on last week's Bank of England 0.25% rate rise in full to savers in the first sign that big financial institutions will use the base rate to increase profit margins..........
    Originally posted by polyphonic99
    They are under no obligation to do so.

    Despite the separation of investment and retail banking, the implications have still not been understood by many. If the penny hasn't dropped yet, then this Bank of England article from 2014 needs to be read and understood. https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf

    In the good old days banks could take your savings and put them in the pot with all their investment deposits, then finance borrowers at various levels of risk. Now with the government guaranteeing your savings, the government won't allow the banks to take such risk. The banks therefore, are not desperate to get their hands on your cash savings..._
    I am not now, nor have I ever been, a Financial Adviser.
    'Forward to the British Spring' 'Viva Wikileaks'
    • EachPenny
    • By EachPenny 7th Aug 18, 10:38 AM
    • 6,157 Posts
    • 16,231 Thanks
    EachPenny
    Thanks Nationwide, I will be moving any remaining money in my accounts with you just as soon as your competitors raise their rates by 0.25%, which for instance Skipton has already promised to do.
    Originally posted by polyphonic99
    Aside from FlexDirect (first year) and the 5% Regular Saver, then the appropriate question is why do you still have any remaining money in Nationwide accounts if maximising interest income is your priority?

    Which of those seven published promises are you claiming they've broken?
    Originally posted by eskbanker
    Nationwide claim their savings interest rates are 'above market average'. The 'market average' they appear to have used is amongst high street bank instant access accounts, rather than the interest rates offered by other mutual building societies. Members might expect Nationwide to benchmark against other institutions which offer the benefit of mutuality, rather than against banks with shareholders to pay. Nationwide also ought to have some advantage of economy of scale.

    So whilst they haven't promised to pay higher rates of interest than other institutions, it does chafe a bit hearing them extolling the virtues of mutuality when their sights are actually set on being indistinguishable from the ravening banks. (in part by diverting profit towards generously incentivising new current account custom)
    "In the future, everyone will be rich for 15 minutes"
    • d63
    • By d63 7th Aug 18, 10:51 AM
    • 24 Posts
    • 16 Thanks
    d63
    Which of those seven published promises are you claiming they've broken?
    Originally posted by eskbanker
    why, none at all that i know of. did i imply otherwise? apologies i'm sure. the only worry i have is when they promise "our only focus is you" that this is probably much what a shark thinks on spying its lunch swimming by.
    but this is the way of the world and i dare say that nothing short of genetic engineering is likely to change it anytime soon.
    • 2010
    • By 2010 7th Aug 18, 11:19 AM
    • 4,198 Posts
    • 3,347 Thanks
    2010
    One day the penny will finally drop that there is no such things as loyalty for ANYTHING.
    Banks/B Soc rates, all insurance, broadband, mobiles, tv packages, etc.,etc.

    Move, move move.
    • xylophone
    • By xylophone 7th Aug 18, 1:24 PM
    • 26,128 Posts
    • 15,485 Thanks
    xylophone
    I keep a Flexdirect account open to take advantage of the regular saver.

    The regular saver pays 5% [(in common with those of the banks with the bubbly guzzling shareholders ) - I did enjoy that advert - can't say the same for the current batch!


    To be completely fair to Nationwide, it does also pay 1% on the balance up to 2500 in the Flexdirect account which M&S/HBC/First Direct don't.

    I've been a member for over twenty years - the "loyalty" saver rate is nothing special.
    Last edited by xylophone; 07-08-2018 at 1:28 PM. Reason: punctuation
    • intalex
    • By intalex 7th Aug 18, 2:10 PM
    • 339 Posts
    • 58 Thanks
    intalex
    Have become increasingly disenchanted with Nationwide over recent years now only have Flex and loyalty single access ISA with them. ISA will be moving soon when things settle. Have been with them over 30 years but they have no loyalty to me so why should I have any to them. Even their loyalty rates are appalling compared to othe financial instituions
    Originally posted by Malchester
    Can't see if they are increasing the rate on the Single Access Loyalty ISA by any amount... anyone know?
    • Bernard Coleslaw
    • By Bernard Coleslaw 7th Aug 18, 2:32 PM
    • 626 Posts
    • 437 Thanks
    Bernard Coleslaw

    Thanks Nationwide, I will be moving any remaining money in my accounts with you just as soon as your competitors raise their rates by 0.25%, which for instance Skipton has already promised to do.
    Originally posted by polyphonic99


    Although Skipton has promised to raise its 'on-sale' rates by 0.25%, not all of its rates. Nice clever use of language.


    So if you're an existing saver with them, what does that mean to you?
    Everyone needs something to believe in.

    I believe I need another beer.
    • Alexland
    • By Alexland 7th Aug 18, 2:35 PM
    • 3,015 Posts
    • 2,354 Thanks
    Alexland
    Shame a 5.25% regular saver would have been good :-)

    The accounts I have with Nationwide are such good value I wouldn't expect them to increase the rate.

    Alex.
    • eskbanker
    • By eskbanker 7th Aug 18, 3:37 PM
    • 7,871 Posts
    • 8,725 Thanks
    eskbanker
    Although Skipton has promised to raise its 'on-sale' rates by 0.25%, not all of its rates. Nice clever use of language.

    So if you're an existing saver with them, what does that mean to you?
    Originally posted by Bernard Coleslaw
    If you have a fixed rate product then obviously it doesn't mean anything to you, as both parties accepted the risks and rewards of that type of account.

    If you have a variable rate account then it presumably means that they'd prefer to get everyone onto their current product range rather than having to support old ones ad infinitum, so they'd naturally encourage people to move by leaving obsolete accounts on unadjusted rates....
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