Fewer than one in 10 savings providers have passed interest rate rise on to savers

Picture: Sonya Duncan

Picture: Sonya Duncan - Credit: Sonya Duncan

Only a fraction of savings account providers have passed on last week's interest rate rise to customers – dashing the hopes of savers for a boost to their investments.

Banks have also been accused of being quick to hike costs for borrowers to reflect the 0.25% rise announced by the Bank of England (BoE) on August 2.

Interest rates are now at 0.75%, the highest level since the financial crisis.

But Norwich-based moneyfacts.co.uk says only 10 of more than 100 providers in the savings market has so far announced how their products will change as a result.

Some have passed on the full 0.25% increase, albeit after August 28, while some major lenders have either partially applied the rise or only applied it on a few account types.

Rachel Springall, finance expert at moneyfacts.co.uk, said: 'It will be disappointing news for many savers to know that they may not benefit from the full 0.25% base rate rise.

'It is a real shame, and just demonstrates why savers should think about switching and not hold their breath for a rate rise on their account.'

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The interest rate rise came as a blow to millions of mortgage borrowers on variable rate deals, with a quarter-point rise adding around £16 a month and £190 a year to the average mortgage.

However, it offered some relief to savers who have seen their nest eggs decimated by above-target inflation and negligible returns.

Many home owners are also locked in to fixed-rate mortgages, and so will not feel an immediate impact from the base rate rise.

And at 0.75%, rates are still very low by historical standards, given that the base rate stood at more than 5% when the credit crisis and subsequent global financial crisis hit.