Interest rates may have been held at a historic low of 0.5% for two months but banks and building societies are defying the freeze to hike loan rates and cut savings interest.

We expose those who are not playing fair.

Overdrafts

Almost a year to the day since Barclays overhauled its current accounts to encourage more customers into its Additions Active accounts, which cost £14.50 a month, it is increasing the overdraft rates by 3 percentage points to 12.9% — even though Bank rate has fallen by 4.5 points in the past 12 months. Eight out of 12 Barclays current accounts will have overdraft rates increased from June 8. Barclays customers with a Premier Card overdraft will fare even worse. Their rate will rise 3.9 points to 16.9%.Barclays said the changes were due to “the cost of providing the overall package of services”. Overdraft rates are at their highest level since 1996, when Bank rate was around 5%. The average rate is around 12.8%, according to Moneyfacts, the financial-data firm.

Mortgages

Last week, Abbey, Woolwich and C&G increased the cost of three year, fixed-rate mortgages by up to 0.4 points — and some analysts are warning of more hikes. The cost of fixed-rate deals is not directly linked to Bank rate, but are priced according to swap rates — the rates lenders pay on wholesale markets. Swap rates fluctuate according to government bond yields. Last week yields spiked following a sell-off in the government bond market as investors moved to protect against future inflation. Ray Boulger of John Charcol said: “We have seen five- and ten-year swap rates hit a floor — I would not expect longer- term fixes to get any cheaper.” First Direct has a three-year fix at 3.89% with a fee of £599 for borrowers with 25% deposit.

Tracker mortgages are priced according to Libor (London interbank offered rate) , which generally reflects the market’s expectations for Bank rate. Libor rose slightly at one point last week but closed unchanged at 1.28%. Lenders have, however, increased their trackers, too. C&G raised its three-year tracker for those with a 40% deposit by 0.2 points to 3.69%. The Co-operative bank has the market-leading tracker at 2.36% with a £995 fee for borrowers with a 25% deposit. More than half of lenders failed to respond to the March Bank rate reduction by cutting their standard variable rates (SVRs), according to moneysupermarket.com, the comparison site. Newcastle building society, for example, has not reduced its SVR since November — and charges a punishing 5.49 points above Bank rate at 5.99%. Standard Life still charges 5.74% and Santander-owned Alliance & Leicester charges 5.09%. Melanie Bien, of Savills Private Finance, the broker, said: “Anyone paying more than 3.5% should remortgage now. Fixes won’t go below that.”

Savings

Manchester building society has cut its Premier Bonus notice account by 0.92 points and its Premier Ninety account by 0.5 points to 2.34% and 2.26% respectively. A saver with £50,000 in a Premier Bonus account would be £460 a year worse off after the reduction. The changes occurred in the past six weeks and were therefore outside the window for most banks to pass on the March cut, according to data from Moneysupermarket. Easy-access accounts — already decimated by the 4.5 point reduction in Bank rate since October — have also been slashed further by some providers. ICICI, the Indian Bank, Citigroup-owned Egg, ING Direct and Anglo Irish have all cut rates.