Facts, figures and comment relating to the Bank Rate increase today. Building societies have over 23 million members (customers) and in the first half of 2017 they approved c225,000 new mortgages, gross lending was c£31 billion. Savers were better off by £380m in total saving with a building society, compared to the big banks over the same time.
Robin Fieth, Chief Executive of the Building Societies Association said:
“This modest increase in the Bank Rate is as expected, but the psychological impact of the first increase in a decade may have some effect on consumer sentiment. The confirmation by the MPC that any future increases are expected to be gradual and limited is welcome. Rates remain very low and the impact on household budgets is not likely to be immediately significant for most people, especially as the majority of mortgages are fixed rate. Any borrower who thinks they may have a problem should get in touch with their lender. The sooner contacts is made the more options are available.
“We estimate that savers did better at building societies to the tune of £380 million in the first six months of this year. Today’s announcement will however, be welcome news for them. As normal, building societies will balance the needs of both savers and borrowers.”
Facts & figures
- 0.25% was the lowest Bank Rate since the BoE was established in 1694 (0.5% is the second lowest)
- Bank Rate last rose on 5 July 2007 from 5.50% to 5.75%
- Bank Rate fell to 0.5% in March 2009 (from 1%) and from 0.5% to 0.25% in August 2016
- Bank Rate was at 0.5% for over 7 years (89 of the past 104 months) - the longest period without a change since the 1950s
- The average Bank Rate was c5% for the decade before the financial crisis (BoE)
- 1.3 million building society borrowers have mortgages which they took out after the last increase in Bank Rate in 2007 (UKF)
- A 0.25% increase on a £100,000 repayment mortgage = c £13/month (BSA)
- 57% of all outstanding mortgage balances are on fixed rates (whole of market/ FCA MLAR)
- 88% of new lending is on fixed rates (whole of market/FCA MLAR)
- 1% of new building society borrowers spend more than 30% of total income on their mortgage (UKF)
- UKF = data from UK Finance RMS figures relating to building societies only
- FCA MLAR = FCA Mortgage Lending & Administration Return
- £380m - BSA analysis comparing the average interest paid on savings balances held with building societies, with the amount that would have been paid using the average effective interest rates on savings held with large Monetary Financial Institutions as collated and published by the Bank of England.
- Download the BSA's 'Can't pay your mortgage?' consumer guide.