The Bank of England raised interest rates to 0.75%, up from 0.5%. Banks and building societies don’t have to increase interest rates, unless the product is specifically linked to the Bank of England base rate. At the moment, it’s early days so most banks haven’t said what they’ll do.
If you have a tracker mortgage, the interest rate will rise by 0.25%. That’s because tracker rate mortgages mirror the rises and falls in the Bank of England base rate. Most lenders are likely to apply the interest rate rise from September 1st, but some may apply this earlier.
Mortgage and savings rate rises
If you have a standard variable rate mortgage or a savings account, the bank or building society has more choice about what it does. It can raise the interest rates by 0.25%, by more or by less. It’s early days, but this is what I’ve found out so far:
Barclays: It has raised the interest rate on its mortgages. Barclays’ standard variable rate will now be 5.24% and the rate that you pay if your Barclays’ deal runs out is 4.24% (it’s 3.49% above the Bank of England base rate). These interest rates will increase on September 1st. You can check all the interest rates on Barclays’ mortgages on its website. It says it’s reviewing its savings rates.
Beverley Building Society: It increase the interest rate on all its savings accounts by 0.25% from August 28th. You can check its savings rates on its website.
Co-op Bank says that its standard variable mortgage rate will rise from 4.74% to 4.99% on September 1st. Interest rates on its tracker mortgage will rise by 0.25% from 1st September. There’s more information about the mortgage rate rise on the Co-op Bank’s website. Co-op Bank is increasing the interest rate on some of its savings accounts. None of the accounts are increasing their interest rates by the full 0.25%. Typically, they’ll rise by between 0.1 and 0.15%. You can read more on Co-op Bank’s website.
Coventry Building Society: It says it will decide by August 23rd whether to raise interest rates on savings and mortgages and, if so, by how much. Any change in rates will apply from September 1st.
Halifax Bank: It will increase its Homeowner Variable Rate from 3.99% to 4.24% and its standard variable rate will rise by the same amount from 3.99% to 4.24%. The change will take place from Monday 6th August. You can read the information on Halifax’s website.
Halifax is also increasing the interest rate on its variable cash ISA. The rate is rising by 0.25% from 0.35% to 0.6% from 31st August. From what I can tell, it doesn’t seem to be increasing the interest rate on any of its other savings accounts. You can read about this interest rate rise on the Halifax website.
Lloyds Bank will raise its Homeowner Variable Rate from 3.99% to 4.24% from 6th August. Its standard variable rate will rise from 2.5% to 2.75% – also from August 6th. It’s also changing its buy-to-let variable mortgage rate. You can read more about these changes on its website. Lloyds Bank is increasing the interest rates on most of its savings accounts by the full 0.25%. On some accounts, the rates aren’t changing if you have between £1 and £1,500 saved. There’s a PDF with all the interest rate changes which you can download.
Nationwide Building Society: says most tracker rate mortgages will rise by 0.25% from September 1st. It is raising the interest rate on a number of savings products, as well as on its variable rate mortgages. Its standard variable rate will rise by 0.25% to 4.24%, while its base mortgage rate will rise by 0.25% to 2.75%.
SAVVY TIP: The base mortgage rate is the rate that people who were previously on a deal were moved to. However, Nationwide scrapped this interest rate for new customers several years ago.
Its mortgage rates will rise on September 1st while savings rates increase on August 31st.
Savings: Nationwide is increasing the interest rates on some savings accounts by just 0.1%, while its Help to Buy ISA rate rises by 0.5% to 2.5%. The Loyalty Saver and Loyalty ISA increase by just 0.1% so the maximum you can get will be 1.1%. The interest rate you earn isn’t linked to how much money you have in your account, but how long you’ve been a continuous member of Nationwide for. You’ll only get the highest rate if you’ve been a member of Nationwide for 15 years or more, without a break. Its Flex Online Saver will increase by 0.1% to 0.6%, its Flexclusive ISA will increase by 0.1% to 1.1%. These are both accounts that you need to have a current account to open. Finally, its Smart Saver (for children) will increase by 0.25% to 1%.
NatWest says that the interest rate on its standard variable rate mortgages by 0.24%. It’s changing the interest rates on some of its savings accounts. Most of its accounts will have an increase in the interest rate of 0.1%. With a few accounts, the full 0.25% rise is being passed on, but only if you have £1 million or more saved. The interest rate on the Help to Buy ISA is rising by 0.5%. I can’t directly link to its PDF that gives details of all the new rates – but the link is towards the top of this page.
Sainsbury’s Bank: hasn’t yet decided what to do about interest rates on savings. It says it will write to customers and tell them about any changes. You can read more here.
Santander says its tracker rate mortgage will increase by 0.25% from September 1st. Santander’s Follow on Rate (which is the rate you’re moved onto once your mortgage deal runs out) will rise by 0.25% from 3.75% to 4%. Its standard variable rate will rise by 0.25% to 4.99% from the start of September. Most of its savings rates are increasing by the full 0.25%, but some are rising by far less. You can read about all the interest rate changes on Santander’s website.
TSB: says that it is increasing the interest rate on its mortgages by 0.25% from September 1st. It’s also increasing the interest rates on its Junior ISA and Young Saver accounts by 0.25%. All other savings accounts will increase by 0.1%. The changes will take effect from September 1st. You can read more.
Virgin Money: it hasn’t yet decided what to do about its savings rates. You can see the information it’s published about its interest rates on its website.
It feels like the banks are playing a game of ‘reverse chicken’ – waiting to see who gives way first and raises the interest rate on their savings accounts.
When interest rates rose by 0.25% last November, many of the banks and building societies did increase the interest rates on their savings accounts. That’s partly because the city regulator, the FCA, has recently been investigating savings accounts.
But, quite a few banks didn’t raise the interest rates on all their savings accounts or they didn’t pass on the interest rate rise in full. Some raised rates by 0.2%, others by as little as 0.15%. I’ll update this article as soon as banks tell us how much interest rates will change by (if at all).
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