As a result of such actions, UK savers have lost out on a fifth of the possible gains from the last two increases by the Bank of England (BoE), the first in August 2006 and the second in November 2006. The BoE raised rates by 0.25 percentage points each time, taking rates from 4.5% before August to 5% in November.
On behalf of the BBC News website, Moneyfacts, an independent financial information firm, examined how most UK savings providers and mortgage lenders had reacted to the two most recent BoE interest rate hikes.
The research discovered that savings account providers passed on average 0.42% of the increase to individual savings account (ISA) holders and between 0.38% and 0.42% to non-ISA savings account holders.
Consequently, savers have been short-changed by approximately a fifth of the rate increase by 0.5 percentage points.
On the other hand, the increased mortgage rates, which climbed more than the BoE’s actual rate increase, were discovered to be passed on far more quickly to mortgage customers, taking on average 20 days in August to raise mortgage rates while it took 30 days for interest rates to increase for savers.
