Commenting on the MPC’s decision not to change the Bank Rate from 5.25%, Andrew Gall, Head of Savings and Economics at the BSA said:
“Today’s decision to keep the Bank Rate at 5.25% will be welcome news for many.
“Whilst we can’t yet be confident that mortgage rates have reached their peak, we have started to see them nudge down a little and today’s news is unlikely to reverse that. However, while inflation remains persistently high, overall rates will stay higher for longer than we thought earlier in the year.
“The number of borrowers struggling to maintain their mortgage payments has started to increase. Whilst building societies’ lower risk approach to lending decisions means they have proportionately fewer loans in arrears compared to banks, there is no room for complacency. Societies are conscious that it is a real worry for families and individuals who are having difficulty meeting their mortgage payments. They are ready and well equipped to offer practical, tailored support to anyone who may be struggling and I would encourage anyone with concerns to contact them as soon as possible, preferably before they miss any payments.
“For savers, there remains a wide choice of accounts with attractive rates available for all levels of deposit. Shopping around can now make a sizeable, financial difference, particularly for those who hold most of their savings in their current account. There is currently £260 billion of savings in accounts not earning any interest, meaning an average saver could be missing out on over £1,000¹ extra income a year.”
¹Based on mean balance of £21,841 earning the current best-buy easy access account rate of 5.2% (Source: https://moneyfactscompare.co.uk/savings-accounts/easy-access-savings-accounts/ Moneyfacts 1 November 2023) for a year compared to no interest in a current account.
The BSA represents all 42 building societies, as well as 7 of the larger credit unions. Building societies serve around 26 million consumers across the UK and have total assets of over £500 billion. Together with their subsidiaries, they have helped over 3.6 million families and individuals to buy a home with mortgages totalling over £370 billion, representing 23% of total mortgage balances outstanding in the UK. They are also helping over 23 million people build their financial resilience, holding over £362 billion of retail savings, accounting for 19% of all cash savings in the UK. Within this, societies account for 41% of all cash ISA balances.
With all of their headquarters outside London, building societies employ around 51,500 full and part-time staff. In addition to digital services they operate through approximately 1,300 branches, holding a rising share of financial services branches in local communities.