Abbey 4.01% Fixed Rate for 2 years

ian-d

No sign of the illusive 4.01% deal!!! :rolleyes:

Innys

I'm sorry, but I don't think this is a good opportunity.

Fixing at that rate for two years is simply too long. One year, maybe, but taking a gamble that interest rates won't rise for two years is, I believe, gazing into a crystal ball.

gozomark

interest rates wouldn't just have to rise, they would have to move a fair bit for this not to be a good deal - 4% for 2 years is basically something like 3-3.5% 1st year and 4.5-5% 2nd year.

For 4.5-5% to be poor in year 2, base rate would need to be around 4-4.5% average in year 2 - ie 2010 - it might possibly finish 2010 there, but average that ? I somewhat doubt it

4% for 2 years looks a good deal to me

Innys

gozomark wrote: »

interest rates wouldn't just have to rise, they would have to move a fair bit for this not to be a good deal - 4% for 2 years is basically something like 3-3.5% 1st year and 4.5-5% 2nd year.

For 4.5-5% to be poor in year 2, base rate would need to be around 4-4.5% average in year 2 - ie 2010 - it might possibly finish 2010 there, but average that ? I somewhat doubt it

4% for 2 years looks a good deal to me

Personally, if I had 30k which I was prepared to lock away, I would go for the 3.5% offering from Birmingham Midshires and then revisit in a year's time. This allows you to retain flexibility with a minimum loss, after tax of just over £100 on your £30k

gozomark

important to remember the premium of fixed rates over base rate are abnormally high at the moment, due to the credit crunch

scenario A - the crisis comes to an end soon, and base rate is put up to say 4-5% over the next 2 years - by the fact the crisis has ended, expect fixed rate premiums to come down to normal, so even though base rate is alot higher, fixed rate products may not improve that much

scenario B - crisis continues - in which case base rate stays low, and I can't see fixed rate products improving

scenario C - inflation picks up dramatically in 2010 (to atleast 3%) and base rate goes to 6% +

this 2 year products looks attractive under A and B, but not C - personally I think most likely is something between A and B (ie a slow end to the credit crisis). C, if it happens, is unlikely to in the next 2 years

soulsaver

opinions4u wrote: »

Surely not?

You mean their name and the northern port of Santander aren't merely coincidence? :T

Possibly... my irony lost on you? Or yours on me?

opinions4u

soulsaver wrote: »

Possibly... my irony lost on you? Or yours on me?

Neither.

Shared delightfully!

soulsaver

Well if they ever make the detail available on their own site we may be able to determine the early access penalties vs risk of rates making it uncompetitive...
But for those trying to mitigate large cash balances, for 'decent' rates, below the FSCS limit observe that if Abbey AND A&L both offer it, you could take both up as aren't they seperately regulated?

alanq

They are separately regulated at present but there is no guarantee that will be the case in two years time. For example Cheltenham and Gloucester used to be regulated separately from Lloyds but that ceased at a few months notice.

alanq

There was an ad in yesterday's paper. It's no partial withdrawals and 120 days loss of interest for early closure.