Nationwide and TSB have announced they won’t pass on the full interest rate rise to most savers – despite doing so for mortgage customers.
Nationwide has said it will only increase some of its savings rates by up to 0.1 percentage point, and in some cases those with savings of £10,000 or less will see no increase at all, while TSB will increase its variable savings by 0.1 percentage point. This is despite both banks increasing their variable and tracker mortgage rates in line with the full 0.25 percentage point base rate rise, which was announced by the Bank of England last week.
Some banks such as HSBC, First Direct and Tesco have already increased their tracker mortgages (which track the base rate) without saying if they will raise savings rates.
And other big names such as Barclays, Co-op Bank, Halifax and Lloyds are also keeping schtum about whether they will pass on the rate rise to their savers, despite confirming their standard variable rate mortgages will increase by 0.25 percentage point.
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What are Nationwide and TSB doing?
Both banks have confirmed they will increase their tracker mortgage rates by 0.25 percentage points on 1 September. Here’s what they are doing with other rates:
- Nationwide will increase its Base Mortgage Rate and Standard Mortgage Rate by 0.25 percentage points in line with the base rate rise on 1 September. Both are variable rates – the Base Mortgage Rate is capped to be no more than 2% above the Bank of England’s base rate, whilst the Standard Mortgage Rate has no cap.
However its Flex Online Saver account will only increase from 0.5% to 0.6%, its Loyalty Saver and ISA from up to 1% to up to 1.1% and its Flex ISA from 1% to 1.1%. Some savings accounts will increase by more though – its Help to Buy ISA will go from 2% to 2.5% and its Smart Children’s Savings account will go from 0.75% to 1%.
For many of Nationwide’s other savings accounts, savers with less than £10,000 in their accounts won’t see any rate increase, those with less than £50,000 will see a 0.05 percentage point rise and those with £50,000+ will see a 0.15 percentage point increase. See the full list of Nationwide account changes.
All these changes to savings will be effective from 31 August.
- TSB will increase its variable mortgage rates by 0.25 percentage point on 1 September. While interest rates on its Young Saver Account and Junior ISA will also increase by 0.25 percentage point, all other variable rate savings accounts will increase by just 0.1 percentage point. All changes will come in from 1 September.
What do Nationwide and TSB say?
Chris Rhodes, executive director of products and propositions at Nationwide Building Society, said: “The sustained low interest rate environment and competition in our core markets will maintain the pressure on margins. Despite this pressure, the society is opting to put mutuality ahead of margin.
“So, while £41 billion of society mortgage balances will see an increase as a result of the bank rate change, more than £70 billion of savings balances will also receive an increase.”
Jatin Patel, product director at TSB said: “This is the second base rate increase we’ve seen in the past twelve months and I’m sure our customers will have many questions about how today’s increase will affect them. Our number one priority is to support our customers through this change.
“People may find it daunting to navigate the changes without support, which is why we have our TSB partners in our branches and in our call centres who are on hand to help.”