Mortgage rates have risen since the budget based on expectations further base rate cuts could be delayed – and while this is bad news for borrowers, higher rates should be great for savers.
But the Money blog can reveal some of the same banks and building societies that have raised mortgage rates in the last three weeks have, counterintuitively, also reduced savings rates.
Savings Champion founder Anna Bowes said: “The latest inflation data should mean that the Bank of England will pause again before cutting interest rates – good news for savers but bad news for borrowers.
“However, some providers have made or are planning cuts to their savings rates anyway.”
These include HSBC, Lloyds, Nationwide, Halifax, Barclays and First Direct, she said.
We spoke to four different brokers who all confirmed these same high street names had raised mortgage rates in the past three weeks.
We have also been made aware of Santander both raising mortgage rates and reducing rates on savings.
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Ranald Mitchell, from mortgage brokers Charwin Private Clients, told Money: “It’s a bit naughty!
“While banks and building societies are quick to hike mortgage rates, squeezing homeowners even further, their miserly cuts to savings rates reveal blatant profiteering at the expense of hardworking savers. It’s a shameless double standard that puts corporate greed ahead of customer interests.”
Justin Moy, managing director at EHF Mortgages, pointed out that savings rates are more likely to be linked to the base rate, which was cut last month – whereas 90% of mortgage deals are funded via swaps/gilts, which have been rising.
For him, the criticism begins when a lenders takes weeks to reflect the base rate cut in tracker mortgages.
He told Money: “We have noticed many lenders reduced their tracker mortgage deals four to six weeks after the announcement of a base rate change, grabbing that extra margin for a while longer, but are much quicker to react to savings rate changes, penalising savers.”
Anna Bowes said that while savings being linked to the base rate explained a drop in variable rate savings accounts – there’s less explanation for fixed-rate bonds and ISAs falling, as these are linked to swap rates.
On a more positive note, Anna said “there are others, mainly those providers that are less well-known, that have increased rates since the latest base rate cut”.
Here’s a look at the best rates currently on offer….
“So, don’t just settle for what you have,” said Anna.
“If your bank or building society is cutting your rate, check if you could earn more elsewhere. Even if you’ve not seen a cut yet, is there an account with someone else that could add valuable pounds to your pocket?”
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What have banks/building societies told us?
A Barclays spokesperson said: “We regularly review our product offering and make changes where necessary. We have seen increased volatility in swap rates in recent weeks which is driving an increase in mortgage rates across the market.
“To help our customers make their money work harder, we regularly review and contact our customers if we feel there is a Barclays savings product better suited to their circumstances and encourage them to check our range on our website, which is frequently updated.
“Rainy Day Saver rates reduce on 13 February 2025 from 5.12% AER/5.00% gross p.a. to 4.87% AER/ 4.76% gross p.a. for balances up to £5k but will remain unchanged at 1.16% AER/1.15% gross p.a. for balances over £5k.”
Nationwide said: “Nationwide hasn’t made any cuts to savings rates in response to the most recent Bank Rate decrease. Savings rate reductions made on 1 November of up to 0.20 percentage points related to the August Bank Rate change and were announced at the start of October.
“On the day of the November Bank Rate reduction, we announced we were passing the cut on in full to our Standard Mortgage Rate (SMR) and for existing tracker mortgage customers from 1 December. We have also reduced our new business tracker mortgage rates by 0.25 percentage points.
“We have announced some small increases to our fixed mortgage range to reflect the swap rate environment and rate changes happening across the market.”
HSBC, which also owns First Direct, provided no comment, while Lloyds/Halifax did not respond.
