Banks have increased mortgage rates by twice as much as the rise in the interest paid to savers, data reveals.
The average two-year fixed-rate mortgage offered by lenders has been hiked by 4.29 percentage points since December 2021.
But savers with easy-access accounts have seen only a 2.33 percentage point rise over the same period, House of Commons Library research shows.
It has meant homeowners with an average outstanding loan balance have paid an additional £2,575 a year – but those with a typical level of savings received just £128 a year more in interest.
The figures come weeks after senior MPs and the financial regulator demanded that banks pass on any Bank of England interest rate rises to savers.
Banks have increased mortgage rates by twice as much as the rise in the interest paid to savers, data reveals (File image)
In December 2021, when the Bank’s base rate sat at 0.1 per cent, high street banks were offering 0.2 per cent to savers and 2.34 per cent to those on a two-year fixed-rate mortgage.
This savings rate increased to just 2.53 per cent by July this year – netting the average saver with £5,500 in their account an extra £128 annually.
But the average two-year fixed rate mortgage has soared to 6.63 per cent since December 2021, costing a borrower with the average outstanding mortgage of £98,000 a total of £10,328 a year, up from £7,575 previously.
Liberal Democrat MP Wera Hobhouse, who commissioned the research, said: ‘It’s shameful that big banks are paying people peanuts on their hard-earned savings while they raise mortgage bills by thousands of pounds a year.
‘People work tirelessly all their lives to be able to save up and provide for the children or build up a nest egg for a rainy day. It adds insult to injury that savings rates have barely moved up as families struggle with the cost of living crisis.
‘Banks are making a fortune by short-changing savers and the Government has been much too slow to take any kind of action. The least that Conservative ministers should be doing is to make banks pay their fair share, by reversing the billions worth of tax cuts they have handed them since 2016.’
MPs from across the House called on major lenders to do their duty to loyal savers.
The average two-year fixed-rate mortgage offered by lenders has been hiked by 4.29 percentage points since December 2021 (File image)
Conservative MP Harriett Baldwin, chairman of the Treasury committee, said: ‘As a committee, we have been questioning the high street banks on their poor savings rates all year and it is clear that savers have been getting a raw deal for too long. While it’s welcome to hear that the banks recognise further action is required, it is time to see an acceleration in progress.
‘We will be following developments closely and will be particularly alert to any apparent foot-dragging.’
Last month, chief executives from HSBC, NatWest, Lloyds and Barclays were hauled in front of the Treasury committee amid accusations they were profiteering from rate hikes.
HSBC came under further scrutiny earlier this month after its pre-tax profits for the first half of this year more than doubled to £16.9billion.
The Financial Conduct Authority has given banks until the end of the month to justify low savings rates and explain how they represent fair value to customers.
A NatWest spokesman said: ‘We keep our products under continual review in line with market conditions.’ A Barclays spokesman said: ‘Following the decision by the Bank of England to increase its base rate, we will be increasing our rates across a number of savings products on August 15 and September 1 and we will be able to provide more information in due course.’
Pella Frost, from HSBC UK, said: ‘We are supporting our customers to make the most of their money in a number of ways, such as increasing the interest rate across our range of savings accounts.’
A Treasury spokesman said the Chancellor had been clear for some time that banks must pass on increased interest rates to savers and met with regulators in June to press this point.
n Britain’s lowest earners face an effective tax rise of more than £26billion next tax year, as they risk being hit hardest by frozen allowances.
The bottom fifth of earners will see their effective tax rate increase by 11 percentage points over the next three years – up to five times more than some higher earners, a report by think-tank the New Economics Foundation has found.
