Do you think savings interest rates will go above 4%?

joemardo1

Hi there,

Looking for a new home for my savings and looking at best rates available

I know its virtually an impossible question to answer, but do you think interest rates will go above 4% in the next 2 years? or is that a good enough rate to fix it for a 2 year period?

many thanks,

Joe

Stavros_3

Its certainly good to fixed for 1 yr, beyond that its anyones guess

stephenni1971

It depends somewhat on the amount you are looking to put away, if it were £5k for example, even if rates rose to 5% in real terms it wouldn't have much effect, so taking a 2 year fix would give security and stability.

For larger sums however, the rate increase has a bigger effect, and a 1 year fix may be the most flexible option - allowing you to review and or move your funds if rates have increased without penalty.

isofa

At the current rates, I'd not want to fix for more than 12 months, especially considering 5-6 months ago, there were fixes at 7%!

cocktail

joemardo1 wrote: »

Hi there,

Looking for a new home for my savings and looking at best rates available

I know its virtually an impossible question to answer, but do you think interest rates will go above 4% in the next 2 years? or is that a good enough rate to fix it for a 2 year period?

many thanks,

Joe

the rates can only go downwards a very short distance in comparison to upwards. in the short term , in this case 2 years 4% fix seems reasonable unless its a large sum you are talking about

nrsql

If you fix at 4% you are hoping that the average rate over the term would be less than that. Say you can get 2% now then for your 2 yr fix you are hoping that rates would be at 2% for a year then less than 6% for a year (a bit less than that due to compounding).
I fixed a relatively small amount for 2 years at 5% in Jan but probably wouldn't do that now (was partly to get funds into another institution). At 4% youre only getting an extra couple of percent so is it worth the risk?

GeorgeHowell

It's even worse then trying to predict interest rates. As many discussions on this forum have concluded, it's real interest rates that count, and who knows what inflation will do over a 1-5 year time horizon ? The only thing to do is hedge by dividing available funds for fixed rate accounts among the various terms. Probably the bias should be towards the nearer term ( 1-2 years) options, simply because the further out in time you go the bigger the uncertainty and risk of getting it wrong.

Blah99

http://forums.moneysavingexpert.com/showthread.html?t=1543909

lilac_lady

4% seems like a very good deal considering the current interest rates.

sheslookinhot

I would consider that 4% is good for a fix for 2 years. If it stays at 2% for a year then it would have to go to above 6% for you to lose. What's the chances ?

Dan29

I wouldn't fix for more than a year in the current climate. The BoE rate obviously has more room to go up than down and I don't think anyone knows what the situation is going to be even by the end of this year, let alone March 2011.