New Bonds appearing

lemonjelly

There has been a small amount of movement in the market recently, and I wondered if others had been monitoring this, and how we feel this bodes for the future?

Recently, we've had the west bromwich offer 4.27%. Rothschild reserve have just put out there 4.35% for 2 years, and the santander group are now offering (online) 4.15% for 2 years.

Most of these are asking for higher deposits (ie £25k plus), however I am wondering if there is beginning to be a little more competition out there for savers cash, and therefore we may see some worthwhile products become available.

A lot of recent bonds have been at lower rates, and for 5 years - not worth it IMO. However with ongoing positive economic news, could the bond market pick up?

Value all opinions...

Reaper

When the market lends at fixed rates it takes into account what it thinks will happen to interest rates in the future. Currently the view is that rates will have to rise at some point (I'll spare you the economics behind it).

As a result both fixed rate mortgages and savings have started moving upwards (mortgages first of course!). The same is not true for variable rates, you will notice the interest rates on those continue to be dire.

For these reasons I would suggest not locking into any interest rate for more than 2 years, and I have stuck to 1 year deals for now.

luvpump

I have noticed this aswell, not a good idea to tie in for long periods IMO .. BOE is likely to raise rates by year end as inflation starts to move up apparently .. I have my cash in an Ulster Bank account at 3.46 gross, So when a REALLY good deal comes along i will move it then ..

lemonjelly

I agree with both of these posts.

Yet at the same time, BoE imply rates will not change for some time...

Is there a consensus that rates will rise, & if so, what timescale do we think?

General consesnsus I hear seem to be no more than 2 years.

Steve_xx

I'd say that rates are being held artificially low. That cannot continue indefinitely, but it may continue until there is a general election.

In addition, oil prices are moving upward as you will note if you have a car. This means that prices for goods and food will be starting to rise, despite the talk of deflation, and these rises will surely stoke up inflationary pressures that will have to result in interest rate rises.

It's a guessing game of course, but indications thus far is that rates will probably remain on hold for the remainder for this year. Though if oil prices contnue to rise then I could see a couple of quarter point rises in the third and fourth quarters.

isofa

Yes I agree with the above too.

PS The Rothschild is being heavily promoted in the press over several weeks now, are they desperate for money. I see they are FSA regulated, yet in their FAQ for the Reserve deposit, they never once mention security/FSCS coverage, which considering the jittery nature today, you'd think they would - just a comment really.

neil324

The 2 year thing is a teaser. I personally would'nt. Although i see the BOE holding off for as long as possible and even then moving very slowly.

Ifts

With fixed rate saving bonds my first choice is to go for a 1 year or at a maximum for 2 years duration at the current rates on offer, not good to tie in for any longer IMO in case you are locked in when rates start to improve over time.

At the moment Lenders' cost of funding for fixed rate mortgages, known as swap rates, has risen over the past month and is likely to rise further hence the reason for a rise in fixed rate mortgage products. So IMO although BOE imply rates will stay low for the foreseeable future, financial institutions have started to offer savers better rates on their fixed rate products to attract more retail deposits.

I just wish I had fixed for longer last year before rates dropped, it is a shock when your current bonds are maturing and the new rates on offer are nearly half of what was on offer a year ago.

I still have the following fixed rate bonds AA @ 5.58 till 10.09, Firstsave @ 5.50 till 06.10, ING @ 5.72 till 09.11, just a shame I cant make any deposits to these. Last month I took out fixed rate bonds with West Bromwich @ 3.38 till 09.10 and Birmingham Midshires @ 3.34 till 06.11 (all rates are quoted net at basic rate tax).

At the moment Rothschild Reserve looks good @ 4.35 gross if you are willing to lock your money in for 2 years.

I hope rates have improved when my next bond matures in 10.09 :rolleyes:

savetilibleed

Yes I have one 6 month FR bond (at 4.5%) maturing end June, then another 1 year one for end July, then end Nov, another two in December, all decent rates 6.5%ish. Then in Jan10 and Feb10 and not so good rates . The best accounts now only have yearly interest option too which isn't so good for us. Guess I'm going to have to be content with the best variable rates that pay monthy, but maybe see how the situation is when some of those later in the year mature.

agsnu

isofa wrote: »

The Rothschild is being heavily promoted in the press over several weeks now, are they desperate for money. I see they are FSA regulated, yet in their FAQ for the Reserve deposit, they never once mention security/FSCS coverage, which considering the jittery nature today, you'd think they would - just a comment really.

http://www.rothschildreserve.co.uk/rothschild-frequently-asked-questions.aspx
Is Rothschild covered by the Financial Services Compensation Scheme ("FSCS")?

Yes. Rothschild is a member of the Financial Services Compensation Scheme established under the Financial Services and Markets Act 2000. Payments under the Scheme are limited to 100% of the first £50,000 of an individual depositor's total deposits with the bank. Where two depositors hold a joint deposit, each depositor may receive a maximum of £50,000 compensation in respect of a claim, giving a total of £100,000. From 30 June 2009, the limits referred to above will be £50,000 (£100,000 for joint accounts) or €50,000 (or €100,000) whichever is the higher. Further details of the Scheme can be found at www.fscs.org.uk and the FSCS can be contacted on 020 7892 7300.

ed123_2

I have read various reports (one in the Sunday Times) that base rate could start to increase by the end of the year.(& some say as early as Autumn). Nobody knows for sure but I would not fix for longer than a year. In my view when they start to raise they will increase very rapidly (as they fell) to ward off inflation. They say the "normal" level for base rate is 5%.