Savers have called on banks to pass on higher interest rates to customers and boost their rainy day funds.
The Bank of England announced interest rates will rise yesterday, after inflation soared to a 10-year high this week. Bank Rate will rise to 0.25pc, up from its lowest ever level of 0.1pc, following a series of emergency stimulus cuts implemented during the crisis.
Savers are hoping higher rates will help them combat rising inflation, while borrowers face already rising mortgage costs.
We spoke to Telegraph Money readers to find out what effect the move will have, good and bad.
‘Savers have endured enough’
Retired journalist Chris Shepherd, from Farnham, Surrey, said he was cautiously optimistic the rate rise would mean a better deal for his cash savings.
“We need an environment where saving is encouraged so we can get back our savings ethic – too many people these days are living far beyond their means,” he said. “The increase is certainly good news for savers, as long as the banks pass on the rate rise to their customers.”
Banks have faced criticism in the past for taking weeks or months to increase the interest rates on savings accounts, following previous Bank Rate rises. Some have even been caught lowering their savings offers in anticipation of higher rates.
“They cash in by putting up mortgages first, while savers are always an afterthought. I think it is quite naughty behaviour,” Mr Shepherd added.
A string of lenders pulled their best mortgage rate deals from the market in recent weeks, even before the announcement from Threadneedle Street.
Brokers have warned the rates on today’s best deals could double within 12 months, if central bankers put up rates further still, adding hundreds to the average borrower’s monthly costs.
