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Also UK bank and building society mergers don't benefit their customers, according to a new study. The analysis of UK bank and building society mergers by the ESRC Centre for Competition Policy at the University of East Anglia - using data from Moneyfacts, the financial information provider - found that although these mergers have generated substantial efficiencies for the banks concerned these benefits haven't been passed on to customers.
The study found that while most merging institutions have benefited from mergers, interest rates for the bulk of banking customers remain unchanged. Indeed, savers who hold notice saving accounts with merging banks and building societies have suffered a decline in interest rates up to six years after a merger takes place.
Dr John Ashton and Dr Khac Pham examined 61 UK bank mergers occurring between 1988 and 2004. For each of these mergers, efficiency changes were recorded for individual banks and interest rate movements were recorded for savings accounts, mortgages and personal loans.
They found that merging banks improve their levels of efficiency up to six years after a merger, indicating that merging banks and building societies can provide banking services to their customers at a lower cost.
By contrast, in most cases the levels of interest paid to, or demanded from, customers, shows no significant difference to the interest rates provided by banks and building societies, which have not merged.
Of greater concern, customers holding notice savings accounts with merging banks have suffered a significant decline in interest rates relative to customers of banks and building societies which have not merged.
Commenting on the findings Dr Ashton said: "Retail banking customers gain little from bank mergers and in some cases can lose out from mergers. Consequently, the consumer perspective must be given more consideration when assessing the merits of future potential mergers."
The findings indicate that while banks have obviously made beneficial merger decisions, these benefits are not shared with their savings, personal loan and mortgage customers. In some cases, such as notice saving accounts, mergers have actually led to worse interest rates for customers.
Homeloan adds 425 jobs in latest boost for city's economy
GLASGOW yesterday received another economic boost with the announcement that 425 new financial services jobs are being created in the city by Homeloan Management.
HML, a subsidiary of Skipton Building Society, is a mortgage administration company which has been awarded a Scottish government grant of £1.6 million in Regional Selective Assistance to support its expansion plans.
Fixed-rate mortgages getting cheaper
The price of fixed rate mortgages is finally starting to fall following months of soaring rates.
It is great news for anyone needing the security of fixed monthly payments, though experts claim prices could rise again if base rates climb from 5.75% to 6% later this year, as expected.
Woolwich has replaced its 6.19% fix until September 30, 2009, plus £995 fee, with a rate of 5.89% and the same fee. Monthly payments on a £130,000 mortgage will be £23 lower on the new product.
Halifax has cut the cost of its 6.09% fix until November 2009 to 5.89%, with the same £1,499 fee. However, you need a large deposit with both deals.
Cheshire Building Society offers the best two-year fix, according to broker Savills Private Finance. It has a 5.69% deal with an £899 fee. On a £130,000 mortgage, that will cost £20,414 over the term.
Manchester Building Society has a fix for any length up to 30 years at 5.99%, only available through broker London & Country. Unlike most long-term fixes, you can get out at any time without paying an early redemption charge. However, it has a high 2% fee.
Brokers claim trackers still offer good value, because many economists predict we are near the top of the rate cycle so your payments could drop next year. However, trackers are suitable only for those able to absorb further base rate rises.
Direct Line has an online-only two-year tracker at 0.28% below base, currently 5.47%, with a £599 fee. That will cost £19,618 over two years on a £130,000 mortgage, assuming base rate remains static.
Bank Careers Direct has decided to place Inspirational and motivational Quotes of the day for its customers to view on site right now. If your Having a hectic day and need some motivation see what some of the greats had to say i.e Abraham Lincoln.
Today's Quote of the day on bankcareersdirect.com is:
"Always bear in mind, that your own resolution to succeed is more important than any other thing. "
Abraham Lincoln.
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