Whilst the Bank of England (BoE) rate rise may have taken a few months to finally become reality, a number of banks and building societies have been quick to implement the higher rates on both savings and mortgages. For savers, this hopefully means bigger returns on investments, whilst higher mortgage interest rates mean that the banks and building societies will benefit.
At the time of writing, only NS&I have announced plans to pass the full 0.25% on to savers, with all account holders, including those with Premium Bonds, getting the full benefit from December 1st.
Many banks will be offering much lower increases (if any) to their customers. For example, Virgin ISA rates fell on the same day as the rate rise was announced. Though it appears that this was coincidental, as account holders had been warned 120 days prior in line with the terms of their account. This means that Virgin ISA (Individual Savings Account) holders are currently seeing returns of 0.75% – less than half of the 1.30% rate the account had before the BoE interest rate fell in August 2016.
Some companies are remaining vague about their plans for savers.
Nationwide has announced plans to pass the full 0.25% rise on to all customers who were affected by the drop of the same amount in August 2016. This restores them to the position they were in over 12 months ago, but there is no mention of how other account holders will be affected.
So far, it appears that savings interest rates will increase by an average of 0.2%. among those meeting this average are Clydesdale and Yorkshire Banks, who will pass a 0.2% rise on to their Flexi Cash ISA customers. Although, with a pre-increase rate of just 0.2%, even passing the full benefit would only give account holders a 0.45% rate overall.
Unfortunately, some banks will be increasing their rates by a below-average amount. RBS, Tesco and NatWest have all announced that their increases will be below the 0.2% average, whilst Lloyds bank will be increasing the interest rates on their savings accounts by just 0.15%.
Unsurprisingly, banks and building societies were quick to raise the interest rates on mortgages. 20 banks announced immediate plans to raise the rates on their Standard Variable Rate (SVR) products by the full amount. These included Barclays, Halifax, Lloyds, Nationwide, Santander and TSB.
RBS have announced that they will be raising the rate on their SVR mortgage products to 0.24% from December 1st, and Tesco will be raising their SVR mortgage products by 0.15%.
It is not surprising that seeing the effect of the rate rise on SVR products has led more people to consider the benefits of fixed rate products. Unfortunately, the rate increase is already hitting new fixed-rate customers and TSB, Metro, Tesco and ATOM Bank have all begun to raise their interest rates in response to the base rate increase.
Unfortunately, some banks and building societies seem to have chosen to delay passing benefits onto savers. Which just shows how important it is to shop around and consistently compare products between banks to make sure that you are getting the best product available to you.
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