Sky News request: Are lenders profiteering?

People are right to feel this is one-sided. When market costs rise, lenders move mortgage rates quickly and blame volatility. But when it comes to savings, rates barely budge because the Bank of England base rate has not changed. That may be the technical defence, but it does not wash with the public. Banks are quick to protect their lending margins and slow to reward savers. So while “profiteering” is a strong word, the result looks the same to ordinary households: borrowers pay more, savers get less, and the institutions in the middle still do well.

Fixed-rate mortgages are typically priced using swap rates, which reflect expectations about future interest rates set by the Bank of England. Over recent weeks, swap rates have risen dramatically. While swap rates have increased significantly, many lenders have not passed the full rise through to their mortgage pricing. They have absorbed part of that increase in order to remain competitive in what remains a highly active mortgage market. Savings rates, meanwhile, tend to behave differently. Easy-access accounts are largely driven by competition for deposits rather than wholesale funding costs. Many banks continue to hold substantial levels of customer deposits, meaning they have less immediate need to increase savings rates dramatically to attract new funds. As a result, savings rates often adjust more slowly than mortgage rates, particularly during periods when financial markets are reassessing the outlook for interest rates.

I think greater knowledge on how mortgage and savings rates are priced is needed - mortgage fixed rates in particular are priced off Swap rates. In contrast, savings rates tend to be based on banks' or building societies' balance-sheet holdings, so they move more in line with the BofE base rate than with Swaps (or the expected future cost of funds). Mortgage rates have increased because the expected base rate cuts in 2026 are less likely in the current climate, making money more expensive in the foreseeable future. Savings or deposits don't have the same influences on pricing.

Savings rates are influenced more by today’s borrowing costs, while fixed mortgage rates are shaped by where lenders think rates are heading next. That is why mortgage pricing can move sharply even when savings rates barely budge. Banks do benefit from the fact many savers stay put rather than shopping around. It is understandable people do not always see the link between the two. Improving financial literacy across the UK would help people make better informed choices and get better value from their savings.

The short answer is that this is comparing a short-term product with long-term ones. They aren’t priced on the same things.

Think of it like booking a holiday. If you want to lock in a price for a hotel room for two years, the hotel is going to charge you a premium because they have to guess where costs are going. If you just turn up on the day, you pay today’s price.

Mortgages are the former; savings accounts are the latter.

Mortgage (Swap) rates are essentially the financial market’s best guess of where interest rates will be over that specific timeframe—two years or five years from now.

Easy access savings are totally different. You could take your money out tomorrow. Because the bank doesn't know if that cash is staying for a day or a year, they can’t afford to pay you a rate based on a long-term guess. Instead, they price it based on very short-term rates—essentially, what the Bank of England is doing today but a bit less to cover their profit.

This is exactly why so many people feel like the system is built against them. When mortgage pricing moves, it moves fast and it nearly always moves against the borrower. But when savings rates should improve, suddenly the benefit barely trickles through. Yes, there is a technical argument that mortgage pricing reacts faster to swap rates and market volatility, but let’s not pretend banks are only innocently protecting margins. They are also taking the chance to make very strong margins when they can. What frustrates me most is that easy access savings are often not luxury money, they are vulnerable money. That is emergency fund money, hospital money, rainy-day money, the kind of money people need to reach quickly when life goes wrong. Yet that money is often rewarded the least. Meanwhile, the better rates are used to attract bigger balances and less vulnerable money. That is where the system starts to feel not just unfair, but backwards.

Mortgage lending is a risky game, and lenders need to take into account the probability of the economy shrinking and customers losing their jobs, not just wat current gilt rates are. With the current global economic conditions set at chaos, it is no wonder lenders are reflecting on how economically risky it is to lender hundreds of thousands of pounds over decades and concluding they might want a bit more bang for their buck.