Big banks are profiteering and should be investigated for failing to pass on full interest rate rises to savers, despite doing so for mortgage customers, MPs said.
The Bank of England increased its base rate — upon which savings accounts and mortgages are based — from 3 per cent to 3.5 per cent on Thursday, its ninth rise since December last year when it was at a record low of 0.1 per cent.
The change will almost immediately affect about 1.7 million people whose mortgages are linked to the base rate. Savers, however, may have to wait weeks or months to benefit, or may even see no change at all.
The growing margin between the interest that savers receive and borrowers pay has boosted the income of the big five banks — Barclays, Santander, HSBC, Lloyds and NatWest — by about £4.4 billion in the last three months of this year, compared with the same time last year, according to the wealth manager AJ Bell.
Yes, of course. Banking margins have been artificially compressed by low interest rates – few are willing to accept negative interest on their deposits – for the past decade and a half.
As we sort ourselves out, try to return to positive real interest rates – something necessary for society as a whole – then those margins will uncompress. Good.
So why are the tossers complaining?