That’s less than half the Bank of England’s official rate of 5% and far below the 6.47% in interest lenders are charging on the average two-year fixed-rate mortgage. In the United Kingdom, the typical instant-access savings account is earning 2.42% in interest, according to financial product comparison website Moneyfacts. Nathan Howard/Bloomberg/Getty ImagesĪmong the 20 countries that share the euro currency, the average instant-access savings account pays a measly 0.21% in annual interest, according to provisional data from the European Central Bank, while the average mortgage comes with a 3.44% charge. The US Federal Reserve has been hiking rates for months, taking them to a range of 5-5.25%. Meanwhile, the cost of a typical 30-year fixed-rate mortgage has hit 6.71%. In the US, where benchmark borrowing costs stand between 5% and 5.25%, the typical savings account pays out just 0.42% in annual interest, according to the Federal Deposit Insurance Corporation (FDIC). It’s a similar story elsewhere in Europe and in the United States where, after more than a year of aggressive rate hikes to tame inflation, the interest that savers earn on their cash has been left in the dust. Some lawmakers and consumer rights advocates think profiteering is the reason savings rates haven’t kept up with interest rates. “We too recognize there is a need for further guidance, and will continue our focus on this.” “They recognized that they needed to do more to help their consumers access the best rates, the UK’s Financial Conduct Committee said in a statement after the meeting. Or so the theory goes.Ī top UK financial regulator met with the bosses of the country’s biggest banks Thursday asking them to explain why the rates on their savings accounts lag so far behind the central bank’s main interest rate - as well as the interest they charge on mortgages and other loans. When central banks raise interest rates, mortgage borrowers can expect higher monthly repayments, while savers are supposed to be rewarded with bigger returns on their deposits.
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