Kent Reliance Building Society has pledged to do all it can to protect savers from plummeting interest rates in the New Year.
The Chatham-based society which has just reported strong results has come under fire for failing to cut its standard variable rate (SVR) to borrowers in line with the recent fall in Bank of England base rate to two per cent.
But chief executive Mike Lazenby said there were seven times as many savers as borrowers and some would face genuine hardship if rates fell too far. The society had a responsibility to take a balanced approach.
"Many of our savers are over the age of 55," he said. "Some are on limited or fixed incomes and they are relying on the interest rate they get to survive to pay their rents or buy food. I think it’s right that as a mutual we try as best we can to protect them."
Most Kent Reliance borrowers were on fixed, discount or tracker mortgages and had seen repayments fall.
Only a small proportion were on standard variable rate, which has only been reduced by a small amount.
"We will probably try and hold savings rates as high as we can and that has to be paid for in some measure by mortgage customers. The people in the most need will get the better deal."
Some experts have argued that instead of cutting rates so sharply, they should be raised, claiming that higher rates to savers would ease the credit crunch and tempt more investors to inject cash into banks and building societies. However, the government has preferred to focus on borrowers rather than savers, ticking off banks for not passing on the full interest rate cut.
Mr Lazenby claimed that the financial services compensation scheme did not help because it obliged building societies to help bail out banks - Kent Reliance will have to pay up to £5.5m.
Without that commitment, the society would be able to offer slightly better deals. "Building societies have had to bail out the banks in a way that was never intended," he said. "They are under quite a lot of pressure because they are having to put money aside that they should not have to put aside."
Kent Reliance Building Society is creating up to 600 new jobs in India over the next few years by adding an office in Pune to its existing offices in Bangalore. It aims to earn substantial income by offering more processing services to third-party clients in the UK and elsewhere.