Savers get a better deal from building societies
New data shows that building societies give the UK’s hard pressed savers a better deal than other deposit takers do.
The Building Societies Association (BSA) has collated this new data using a similar methodology to the effective rates data compiled and published by the Bank of England. These cover all outstanding balances, so include existing accounts as well as new business. They therefore indicate the relative long-term value offered by different providers.
The data shows that savers with building societies received an average of 1.58% on fixed rate and notice accounts across 2016, compared to an average of 1.30% in the Bank of England statistics. For instant access accounts, savers with building societies received an average rate of 0.88% in 2016, compared to 0.65% in the Bank of England data.
In the mortgage market building societies have grown their share of new lending considerably in recent years, and offer competitive rates to borrowers. As a result, the gap, or spread, between mortgage and savings rates was much narrower at building societies than at other providers.
Commenting on these results, Robin Fieth, Chief Executive of the BSA, said:
“These results demonstrate that savers with building societies get a better deal on cash savings. This includes accounts closed to new deposits, showing that at a time of low interest rates across the market societies have looked after their loyal savers by providing value over the long-term.
“The figures also indicate an important difference that comes from being owned by customers, not external shareholders. Building societies exist for the benefit of their customers, who are also members. They do not have to pay dividends to shareholders and are therefore able to give more back directly in terms of better deals. It is one of the ways that mutuality is a tangible benefit to consumers.”
View the charts here.