Savers receiving poor deals
Published On 15 December 2006
Millions of savers are losing out under interest rate rises following the Bank of England's changes to the base interest rate, new research has found. A survey of savings and mortgage providers by personal finance website moneyfacts and the BBC reveals stark differences between the rates received by borrowers and savers.
Following the Bank of England base rate rise to five per cent, there has been a greater increase in lenders' mortgage rates than those enjoyed by people with savings accounts.
Critics say banks are taking advantage of rate changes by squeezing cash from borrowers but failing to offer a better deal to savers.
Moneyfacts spokeswoman Lisa Taylor said: "The combination of raising mortgage rates by a greater amount - virtually 0.1 per cent on average - and doing it more quickly than savings rates, undoubtedly nets the banks and building societies a tidy profit."
People saving with Individual Savings Accounts (ISAs) benefited more than those using branch-based deposit accounts, she added.
"Consumers need to check how much their savings account pays, if it is out of line with best buy rates, then perhaps it's time they voted with their feet," Ms Taylor said.
The average ISA interest rate has increased by an average of 0.42 per cent over the past three months. Savings accounts have increased by between 0.38 per cent and 0.42 per cent in the same period, and mortgage interest rates by 0.51 per cent.
