Every society raised the rates charged to borrowers by up to 0.4 per cent in the aftermath of the base rate increase from 5.25 to 5.75 per cent five weeks ago.
But so far, several societies, including Woolwich, Bradford & Bingley and Leeds Permanent, are refusing to join their rivals in raising rates for savers. Others, such as Halifax, Nationwide and National & Provincial, did so only this week.
Abbey National and Nationwide increased their mortgage rates for new borrowers on 12 September, the day base rates went up. Nationwide's went up from 7.74 to 8.14 per cent, while Abbey National's rose to 8.09 per cent.
Existing borrowers were told their variable rates would go up from 1 October. Abbey also announced that it was raising its rates to savers by up to 0.35 per cent from the beginning of that month.
Charles Toner, director of retail operations at Abbey National, said: 'There is a definite link between mortgages and savings. For us it is the relationship that matters most. About 80 per cent of our mortgage book is funded by retail savings. The rest comes from the money markets, which are themselves affected by base rate increases.
'The market is very competitive and we felt it was important to reflect any increase in our mortgage rates in other areas too. Obviously this is not an even process. Our rates will be higher for investment accounts and lower for transmission accounts.'
A spokesman for Woolwich denied suggestions that its account- holders were being short-changed. He said: 'It is as much in our interests as those of our investors that we offer products which give comparable or better value than those of other providers.
'We review our rates on an on- going basis and not just when there is a change in base rates. This can be seen by looking at the present rate structures in comparison with those of other societies which have already announced increased rates.'
He added that for 90-day notice accounts, which Woolwich regards as a key market, it offers returns similar to or better than many competitors'. On balances above pounds 10,000, Woolwich pays 5.3 per cent gross, compared to 5 per cent from Halifax and 5.2 per cent from Abbey National.
Dennis Brockwell, divisional marketing director at Nationwide, whose society increased its rates only on 17 October, said: 'We have a good record of interest rate stability.
'During 1994 nearly all banks and building societies have cut their savings rates, while ours have not changed since December 1993.
'We hope that our customers will appreciate this stability at a time whan others were cutting rates.'
Ed Hucks, director of savings at N&P, said that despite his society only raising investment rates last week, most N&P savers would benefit fully from the September base rate increase.
'Even though we haven't passed on the full 0.5 per cent base rate rise to our mortgage customers, we have tried to be as generous as possible to the majority of our savers,' he said.
'We have ensured that savers with lower balances benefit the most from our increases. On our two most popular accounts, Instant Reserve and Private Reserve, anyone with savings between pounds 500 and pounds 10,000 will see their interest rates rise by at least 0.5 per cent.'Reuse content