As consumers feel interest rate pain, are bank and building society brands taking a hit?

Retail lenders waste no time in passing on increases in Bank of England base rates to their customers. So is it reasonable to assume that, in this period of rising rates, consumers are less happy with banks and building societies than they used to be?

On the face of it, the answer is ‘no’. Since base rates began to creep up in December 2021, consumer impression of the sector (banks AND building society brands tracked as a whole) has actually climbed, from a score of 5.1 in November 2021 to 6.0 for the last full month (May 2023).

The sector’s Value metric (a net score of whether brands offer good or bad value for money) tells a similar story – while it is low compared to other sectors, it’s nevertheless considerably higher now than it was before rates started to rise (0.3 In November 2021 vs. 1.4 for May 2023).

So why is this? Is it because savers outnumber borrowers and better saving rates are helping to push up scores?

This doesn’t appear to be the case either. When we filter for those who currently have a mortgage, our data shows similar trends. In fact, impression of the sector among this segment is typically higher than it is among the general population – and not just a little higher either. Value, meanwhile, tells a similar story while Satisfaction with banking brands is significantly higher among mortgagees than it is among the general public – and hasn’t materially declined since rates started to go up.

So far, then, bank and building society brands have been bulletproof when it comes to interest rate raises – even among those they will hurt the most. But should banks need to revert to tougher sanctions on consumers who can’t pay in the coming months, this relatively benign view may well change.