Martin Lewis has slammed banks for 'profiteering' after the Bank of England (BOE) raised interest rates last week.
The Money Saving Expert joined Mishal Husain on Monday's Today programme (June 26). They discussed what the hike meant for those with mortgages, while Martin suggested the bank could've instead increased savings rates to encourage consumers to save more and spend less.
Martin said: "The fact that the banks, who remember we bailed out in 2007 when they were in trouble, the banks are now profiteering by increasing their margins when we - the state, the taxpayer - is in trouble - [it] seems a bit beyond the pale to me.
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Mishal interjected, adding this has 'always been the case' whenever interest rates would rise. "You always hear that the banks don't pass it on the same way they do to borrowers," she said.
Martin agreed that it 'is always the case' but added that it wasn't a reason to say it was 'absolutely fine' in the middle of an economic crisis. "We've got huge inflationary cost of living problems that we allow the banks to massively increase their profits on the back of increasing margins.
"I don't think that's an argument for not doing it at all. This is a margin growth - the difference between what they're charging borrowers and what they're charging savers has gone up pretty substantially over the past year as we've been seeing interest rate rises."
Martin added the banks should be increasing their margins and passing on the gain to savers, which he said is 'a much more palatable form of "punishment" to try and bring inflation down' than putting up rates for borrowers.
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It comes as the Bank of England raised interest rates from 4.5 percent to 5 percent last week. The Office for National Statistics (ONS) revealed that inflation rates have not changed from 8.7 percent despite a consistent increase in interest rates.
The BoE raises interest rates to ensure that inflation is brought down. The Bank's Base Rate is factored by the country's economical situation and it is up to the Bank to decide what will bring down the rate of inflation over the next few years.
The BoE has frequently signified that it wants inflation to drop and stay at 2 per cent. However, inflation has failed to drop down in April and May which was likely a large factor in today's decision.
People whose savings accounts pay interest might see an increase in their reserves. But those who have a loan or a mortgage with a variable interest rate will notice their payments increasing.
However, if you're on a fixed rate, you won't see any changes to your payments until the end of your fixed period. If you're concerned about how high your monthly payments could go up, you can use a mortgage calculator to better prepare yourself.
