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Savers, feel the mutual love

Building societies continue to demonstrate that they offer greater value

“Building societies continue to demonstrate that they offer greater value to long-suffering savers than banks.”

So says in an in-depth look at the comings, goings, rising and (mostly) falling of accounts from banks and mutuals.

The headlines are:

  • Over 80 per cent of building society accounts pay more than base rate, compared to just 58 per cent of accounts held with banks
  • The average rate on live variable rate accounts from banks has halved in the last five years
  • In six years, the average rate paid by banks has dropped by nearly 10 per cent more than that paid by building societies
  • The average variable rate paid by building societies throughout 2016 is 1.09 per cent, compared to 0.81 per cent paid by banks.

That all chimes with our experience. Thanks to our competitive range of savings accounts we grew our retail savings balances by £34m last year (seven per cent growth) and will have increased them by another £10m in our first quarter of 2017 (Dec – Feb).

 Fixed rate bonds

We are about to add two and five-year fixed rate bonds to our product range. Basically, when it comes to savers, unlike some of the larger banks we are open for business.

Funding for Lending and the Term Funding scheme drove down demand for retail deposits and whilst the banks turned away from savers as they had no need for them, this vital constituency in our long-term history and our long-term future has never left our gaze.

Brian Morris, head of savings policy at the Building Societies Association, put it perfectly:

“In the low interest rate environment that savers have suffered since 2009, rate differences and behaviour towards loyal savers matters. There is a clear link between customer ownership and what it means for culture and how we do business around here.

“In practice it means that difficult decisions about interest rates are approached both with savers and borrowers in mind without the need to maximise profit.  All providers face the same external factors, but this research from Savings Champion shows in numbers what a different approach to decision making looks like.”

Hinckley & Rugby Building Society chief executive Chris White.

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