Banks, which last week agreed to more flexibility for mortgage customers amid the fast-rising interest rates, have now been warned by the chancellor of the exchequer to further buck up their ideas when it comes to savings too.
Since Friday's meeting, high street banks have upped their savings rates, but Jeremy Hunt told Parliament it was taking “too long” for savers with instant access bank accounts to receive appropriate interest rates without serious political prodding.
After the Bank of England last week raised the base rate to 5.0%, mortgage lenders rushed to withdraw products at lower rates and issue loans with higher rates.
“I’m working on a solution,” Hunt said in response to the question in parliament. “It’s an issue that needs to be resolved.”
On Friday, Hunt met the bosses of Lloyds, NatWest, Santander UK, Virgin Money and Nationwide Building Society to push for the lenders to offer more "flexibility" to mortgage customers.
Banks agreed at the meeting that mortgage borrowers will not have their credit score affected if they struggle to meet repayments, that a temporary six-month window will be allowed before customers return to their original agreement and that anyone at risk of repossession will also be able to delay any move by their lender for 12 months.
Hunt told the House of Commons that he also called for action on savings “in no uncertain terms”.
Harriett Baldwin, the chair of the Commons Treasury Committee, said banks’ quarterly results would be closely watched.
Following Friday's meeting, there were signs of banks making moves to do the right thing, but HSBC's new eye-catching savings rate of 7% interest was only for consumers depositing £25 a month over 12 months. The best rates, as ever, are for savers willing to lock their money away in fixed bonds for one or two years, which routinely come with rates above 5%.