Interst Rates Down again by 1%

tuggy12

LongTermLurker wrote: »

Not a problem - anyone who reads my posts knows I'm not going to make it up.

I have a "portfolio" of savings accounts. There are FTDs paying at or around 7%, no notice fixed between 6% and 6.5% and Regular Savers at around 8%, 10% and 12%. Then there's my offset mortgage, which is effectively a tax-free gain. The info was always on this forum, hense my sig. I have little in the way of variable rate interest accounts but easy access to a big chunk of my money. Existing and new cash is all taken care of.

Egg is paying me 6.3% and Halifax GSR pays 6%. I opened them just around the time of the 0.5% and 1.5% cuts because it was clear as day that rates were gonna fall - Yorkshire Boy had been telling everyone for months what a great idea the Egg account was. Also some of the RS accounts allow emergency withdrawals, subject to an interest penalty.

Most of this year? Barclays had a 7.75% RS, Halifax 10% (if you locked away £5k you could have had 12% on it), A&L had 12%, I think Abbey had 8% or 15% if you took out an investment product - there were loads at these high rates.

Thanks for that. I can see how you used the regular savers to push up your average but the relatively small amounts you are allowed to invest in these put me off. I know most of them have a limit of £250 per month, so in a year the average balance is around £1500.

The Egg account is a good one, I had a similar one with Coventry BS that paid a fixed 6.4% for the first year (easy access). Unfortunately this expired a couple of weeks ago and it's now down to a variable 4.5% before today's cut.
I'm up to the FSCS limit on two 7% fixed accounts with ICICI and daren't take advantage of their regular easy access Hisave account st 5.65%.

Anyway in the coming months when existing fixed term deals mature, I can see a very lean time for savers.

LongTermLurker

MABLE wrote: »

I fully blame the idiots who have bought now and cant pay later.

Yup, totally agree - debt can be good as long as it's organised debt.

LongTermLurker

tuggy12 wrote: »

Thanks for that. I can see how you used the regular savers to push up your average but the relatively small amounts you are allowed to invest in these put me off. I know most of them have a limit of £250 per month, so in a year the average balance is around £1500.

Yeah, you need a few of them. Halifax allowed up to £6000. That "average balance" you mention is only valid if you're sliding in existing funds - if you have new money to save then it just builds up.

The Egg account is a good one, I had a similar one with Coventry BS that paid a fixed 6.4% for the first year (easy access). Unfortunately this expired a couple of weeks ago and it's now down to a variable 4.5% before today's cut.
I'm up to the FSCS limit on two 7% fixed accounts with ICICI and daren't take advantage of their regular easy access Hisave account st 5.65%.

Anyway in the coming months when existing fixed term deals mature, I can see a very lean time for savers.

Don't get me wrong, I'm not being critical, just harshly pointing out what options were about a short while ago, and how balancing your money sing different rates can allow you to get good "locked away" rates and good "available" rates. Hopefully interest rates will rise in a few months.

Old_Slaphead

MABLE wrote: »

I fully blame the idiots who have bought now and cant pay later. I have not got into debt and have looked after money. However if you are in debt or bankrupt you get well looked after and we savers have to get the best deal we can. Bl...y scandoulous.

You and me and lots more like us are just Gordon Brown's cannon fodder.

Without our savings the mortgage and loans market would simply collapse (banks need us but it's just a case of divide and rule) - maybe we savers should go on strike.

MiserlyMartin

Was just wondering about the National Savings Index Linked Bond. If RPI went negative ie- -0.5% or more, would they count a negative figure in the rate they pay out. I have rpi +1.35%, so in the above scenerio would the rate decrease to 0.85%?

udydudy

good lord!!! I was lucky, though past financial industry experience did help... All ISAs i.e nearly £17k each(me & OH) fixed for minimum next 3 [EMAIL="yrs@6%"]yrs@6%[/EMAIL]+ last one was the northern rock 5 yr(2013- issue 87 I think)... Also got the tesco PF at 6.5%(I think it is variable though!! 2.5% bonus incl) and the halifax web reward which is 5% and the Barclays 7.5%(7.75% AER) monthly regular saver.

I would suggest the barclays regular saver if still available.

YorkshireBoy

udydudy wrote: »

Also got the tesco PF at 6.5%(I think it is variable though!! 2.5% bonus incl)

It was cut to 6% (inc 1.5% 12 month bonus) a week ago.

Don't forget it has yet to be 'adjusted' for the last two base rate cuts, so expect (2% + 1.5% 3.5% by the end of the month/mid-Jan at the latest?

MM46

tuggy12 wrote: »

This is how I see the big picture.

Cutting interest rates affects two groups:

1) Private individuals. Split into Savers or Borrowers

2) Companies.

Within group 1)

Reducing the interest rate simply moves cash from one group to another, no extra cash is made available.

What is certain is that savers will immediately have less to spend.

What is not certain is when borrowers will benefit from an increase in their wealth and when they do, will they spend it or use it to reduce debt.
My understanding is that approximately half of all mortgages are at fixed rates for various terms, so no quick benefit there.
Personal loans are normally done at fixed interest rates again for a fixed term. So people with current loans will not benefit.
Overdraft interest should be reduced fairly quickly but are individuals with overdrafts likely to spend the interest saved or just simply use it to reduce their overdraft.?



Within Group 2

Companies should certainly benefit from reduced rates, with all the usual advantages, ultimately producing more jobs.
But this isn't happening, The banks are not lending more money, they are lending less and are crippling many businesses.
Lending criteria have been tightened up all round and I can't see how a lower interest rate will change this.


Drastically reducing interest rates didn't work in Japan and it will not work here either.

What about new borrowers - isn't one aim of the interest cut to get the housing market moving again? Whether it will work is another question.

juicyjude

And now savers are getting nothing for their money, how are we going to be able to spend, spend, spend! The banks want our money though, they are very quick to reduce:eek: the interest rates to savers, not so quick to go the other way for borrowers. Savers have been totally forgotten and ignored in all this. The world has gone mad

ManAtHome

MM46 wrote: »

What about new borrowers - isn't one aim of the interest cut to get the housing market moving again?

Banks are quickly pullling any BoE-linked mortgages so they don't have to 'sell' at a loss. BoE and Troosers can stamp their feet as much as they like, ultimately somebody has to provide the funds to lend out and that market shrinks as rates go lower.