The Bank of England's Funding for Lending billions are unlocking the mortgage market but savers are getting their rawest deal for nearly four years as banks fatten margins, it has emerged.
December figures showed an unexpected surge in mortgage loan approvals to 55,578, compared with November's 54,011, in a traditionally quieter month for the housing market.
But the data also showed that the average rate paid by lenders on new savings slumped 0.2 percentage points to 2.11 per cent over the month, the lowest return since the depths of the recession in March 2009.
In contrast the average rate on new mortgages dropped by much less, down 0.07 percentage points to 3.65 per cent.
The Bank's FLS initiative, which allows participants access to cheap funds in return for growing their lending, is expected to see a "significant" boost in credit availability this year. But the Bank's executive director Andrew Bailey told MPs last week lenders had slashed deposit rates much more than mortgages and "the jury is still out on whether we have seen as much adjustment as we ought to see".
Banks will now face new pressure over profits and bonuses.