SAVERS WERE hit by a double whammy as windfall shares tumbled on the news of higher mortgage bills and banks promised only derisory increases on their accounts.

Many investors, particularly the retired, would have cheered if the banks had lifted their mortgage rates by the full 0.25 per cent and passed the increase on to them. Instead the most they are likely to see is an increase of 0.14 per cent, which would put an extra pounds 1.40 pounds a year before tax in the pocket of a saver with pounds 1,000 on deposit.

But the chance of even this modest pay rise is slim. Banks traditionally exploit interest rate changes to increase their own profit margins, usually at the expense of savers.

The Halifax has pledged to increase its rates on October 1, when borrowers begin to pay more. In reality, it is likely to tinker across the product range, rather than make big upwards adjustments.

The feelgood factor of savers with windfall shares in former building societies will also have been dented by the impact of the rate rise on these share prices. The mortgage price war had already cast a shadow over their value, but this latest move sent some prices reeling.

The Woolwich, which fell 7.24p to 340p is still trading well below its market debut of 375p. Abbey National also slipped, as did share prices of high street banks such as HSBC and LloydsTSB.