Bank bosses have been probed by the UK's financial watchdog over complaints that interest rates on savings are too low and are not being passed on to savers.
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Higher interest rates have led banks to put up mortgage costs sharply, but savings rates are barely rising.
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Chancellor Jeremy Hunt has finally noticed that savers have been ripped off and says it is an "issue which needs solving", the BBC reports.
Millions are struggling with the soaring cost of living, higher mortgage rates and energy bills, which have also failed to come down following falling oil and gas prices.
The heads of Lloyds, HSBC, NatWest and Barclays banks were summoned by the Financial Conduct Authority (FCA) on Thursday.
The watchdog will question the banks on poor savings rates.
HSBC said it had increased its savings rates "more than a dozen times since the beginning of last year, with every savings product seeing rates increased on multiple occasions during that time".
NatWest have not passed on rates on many of its older accounts at all, leaving it to customers to switch to different accounts to achieve a decent rate on their savings.
The Bank of England has been increasing UK interest rates since December 2021 as it tries to bring down soaring price rises.
Its base rate - which has a direct effect on mortgage and savings rates has risen from almost zero to 5% in the last 18 months.
The Central Bank wants to make it more expensive for people to borrow and spend and encourage them to save – in the hope that we will all spend less so that inflation cools.
Average mortgage rates have soared above 6%, while returns on savings and current accounts have risen by a much smaller amount, in some case not at all.
The average rate for a two-year mortgage deal hit 6.47%, while the average easy access savings rate was 2.45%, a gap of 4.02 percentage points.
The average one-year fixed savings rate was 4.8%.
Low returns on savings combined high inflations is eating away at people’s savings.
This follows over a decade of derisory returns. The banks have been offering poor savings rates since the 2008 financial crisis. Since then, it has been more profitable to borrow money and buy assets such as property, hence the housing bubble and unaffordable homes for first-time buyers.
The big four High Street banks have a monopoly on banking, lending and savings, although challenger banks are making headway.
Many older people are not used to internet banking at a time when the four main banks are closing hundreds of high street branches leaving customers isolated.
Even if the banks increase savings rates increase, money held in a bank account will not give you a ‘real’ rate of return above inflation.
If you want your money to grow so you can build wealth and become financially free you need to invest it into real assets, such as property or the stock market.
This can be done using low-cost tracker funds, unit trusts, mutual funds and pension funds. Average returns in a tracker fund invested in the US S&P 500 index are around 10% per annum, and you can start saving as little as £50 per month into most funds.
See also:
Housing Market in DEEP Trouble: https://youtu.be/USGREwntT1I
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