It’s now been more than a week since the Bank of England announced the first increase in interest rates in several years. A decision with inevitably unfortunate repercussions for millions of borrowers, but good news for those who’ve been finding it borderline impossible to access decent savings account with viable rates of interest.
Or at least, so it seemed.
Here we are more than a week later and it’s become painfully clear that the major banks in the UK don’t seem to be in any rush to pass these interest rate hikes on to their customers. Base rates have already affected the on-going repayment terms of millions of borrowers, but those on the receiving end of the equation are still being short-changed.
Initial optimism is, therefore, being replaced with something of a nagging sense of doubt and distrust.
The announcement of an increase in base rates from the Bank of England marked what could/should have been the beginning of the end of a magical era for borrowers. Over the past few years, borrowing products like mortgages and personal loans have been practically given away with little to no interest payable whatsoever. During this time, however, the average interest rate on savings accounts sat at a rather pathetic 0.35% – some falling as low as 0.01%.
When interest rates go up, so too do borrowing costs and the interest rates offered to savings customers too. Although in this case, the former has happened with no sign of the latter so far.
The question being – what should you do if your own bank appears to be dragging its heels?
Unfortunately, there’s no hard and fast answer as there are too many variables to consider. That said, there are really only two options to choose from – one being to stay put, the other being to seek a better deal elsewhere.
At this stage, it’s impossible to tell which banks will and won’t eventually pass these interest rates on to their customers, or to what extent they will do so. And it’s not as if they’ll even give you the slightest hint as to their intended course of action, either. That said, banks are always happy to poach customers from the competition – usually by offering at least modestly better deals. So if you’re genuinely unhappy with your bank, there’s nothing to stop you seeking a better deal elsewhere. Use a bridging loan calculator or similar so you are aware of the payments back and ensure you can afford them. This won’t guarantee you a solid rate of interest for the long-term, but it’s still an option worth exploring.
