Leading banks and building societies are under fire for using the increase in base rates announced by the Bank of England's Monetary Policy Committee earlier this month as an opportunity to increase profit margins.
While almost all mortgage lenders are expected to pass on the 0.25 percentage point increase to borrowers with effect from the beginning of next month, many are not planning to offer extra interest to customers with savings accounts.
Moneyfacts, the savings market analyst, said that prior to the base rate increase, more than 40 banks and building societies had actually cut savings rates since the start of the year, despite the fact there has been no base rate reduction since last August. None of the providers to have reduced rates now intend to increase what they pay by more than this month's base rate rise, despite charging borrowers more.
"Now that base rates have increased, many consumers will be looking for increased returns on their savings," said Rachel Thrussell, head of savings research at Moneyfacts. "However, if they have been one of the unfortunate customers to have seen their rates fall over the last seven months, they may in fact be no better off, so the only winner in these cases seems to be the provider."
So far, around 20 mortgage providers - including Britain's biggest lender, Halifax Bank - have increased their standard variable rates to reflect the base rate increase.Reuse content