Martin Lewis has slammed banks and said it is “absolutely outrageous” they are only fully passing “rate rises on to borrowers not savers.”
Lewis said that it is “counterproductive and profiteering” and encouraging saving, takes money out of the economy to help inflation too. He added that the government “should be pushing hard to ensure banks don’t just increase margins.”
On Thursday the Bank of England raised interest rates from 4.5% to 5% and the average two year tracker mortgage is now 5.66%, with a two fixed residential mortgage rate is unchanged and currently sits at 6.19%.
Moneyfactscompare.co.uk also released figures which shows an average two year fixed residential mortgage rate was slightly raised on Friday to 5.83%.
However, the average easy access Isa rate is 2.47% and the average easy access savings rate on Friday is just 2.35%, Moneyfacts added.
The money saving expert told ITV’s Good Morning Britain over the impact of soaring interest rates for mortgage holders, Lewis said, “None of this is accidental. The fact that mortgage borrowers are paying a lot more is the policy.”
Lewis told the programme on Friday morning, “Nobody needs to be under any uncertain terms that the idea that mortgage borrowers are being squeezed and their incomes are reducing is not an accidental by-product.
“It is absolutely deliberately why interest rates go up.
“Interest rates are put up to try and take money out of the economy, so you put borrowing rates up so that borrowers have less money, and you want savings rates to go up so that people save more and they don’t spend more.
“That’s the theory behind this.
“So the fact that mortgage borrowers are being squeezed is an absolutely deliberate thing.
“What that means is the Chancellor is not going to call for help and more money to people who have mortgages. Because that would, if you’re following the theory, be counter-productive.”
Lewis spoke with the Chancellor earlier this week, said that lenders must be stopped from increasing their profits on the back of soaring interest rates.
He said, “They’re putting borrowing up, but they’re not putting savings up by the same amount.
“That seems absolutely outrageous to me, because when the banks were struggling in 2007/2008, we, the state, the taxpayer, bailed them out.
“We, the state, the taxpayer are struggling right now. They should be doing what they can in return, because they’re too big to fail and, now, they don’t want us to fail. They should be doing what they can in return.
“So to be increasing profits, increasing margins at this point seems absolutely wrong. It’s profiteering.
“If I were the Chancellor, and what I said to the Chancellor obviously is, I think you need to make sure that they put savings rates up at least with the same rate as borrowing.
“Because if you do that, you take money out of the economy and that’s another way of helping inflation that’s less painful than putting lending up.
“But also they need to put money aside to help with forbearance.
“Because even if the idea is we want to, not me, as a state, we want to squeeze borrowers ’til the pips come out so that they haven’t got that much disposable income, then what you don’t want is people defaulting or going into arrears or being repossessed.”
Lewis was then asked about a large number of people being on fixed-rate mortgages, he said, “That’s the real problem with increasing inflation when not many people are on variable rate mortgages. It’s a very blunt tool that disproportionately affects a few people.”