• Fri. Mar 24th, 2023

Hopes shattered as banks fail to pass on interest rate rise

ByJames Forsyth

Jan 23, 2022

The Bank of England upped the base rate to 0.25% in December, but since then only a handful of savers have felt the benefit

The recent unexpected rise in interest rates could have been the good news that savers had waited so long for. But more than five weeks after the Bank of England increased rates, only four financial firms have passed on the full rise to all, or nearly all, of their variable-rate savings account customers. The Bank decided on 16 December to lift the base rate from its historic low of 0.1% to 0.25%, prompting expectation it would be passed on.

But several banks and building societies boosted rates on just one, or a handful, of accounts in the weeks following the decision, and some have even reduced them. Only Suffolk, Newcastle and Cambridge building societies, and Atom bank, raised rates by the full 0.15% across all, or the majority of their ranges, according to financial data provider Moneyfacts.

This leaves the vast majority of long-suffering savers still waiting for a rise that may never come. Some commentators believe this is unlikely to change any time soon, even if – as many expect – the Bank announces another increase on 3 February. Analysts expect further rises this year to take the base rate above 1%. Adrian Lowery, a personal finance expert at investing platform Bestinvest, says that “most of the big banks are uninterested in attracting savers’ deposits … and so will probably decline to pass on base-rate hikes in any meaningful way”.