Interest rates forecasted to go up but will saving rates do the same?

Stonk

Deemy wrote:

The BOE Interest rates tend to lag the market, Savings rates will rise higher BEFORE interest rates move higher

Betcha they don't! It works on the way down, i.e., the banks use the money-market rates to justify decreasing their savings rates; but I don't expect it will work the same on the way up! They'll wait until the BoE rate increases. This is because they are, generally speaking, crafty swine.

Deemy wrote:

Don't worry it won't be long when the savings rates are back above 5%

I think so too, and not before time. It should also shake the housing market a bit, which it very much needs.

Deemy

Stonk wrote:

Betcha they don't! It works on the way down, i.e., the banks use the money-market rates to justify decreasing their savings rates; but I don't expect it will work the same on the way up! They'll wait until the BoE rate increases. This is because they are, generally speaking, crafty swine.



I think so too, and not before time. It should also shake the housing market a bit, which it very much needs.

If you look at what happened during the last switch from a down cycle to an up cycle in 2003.

base rates bottomed in June 2003 at 3.5%, so did savings rates at about 3.75% on a typical 1 year fixed rate bond.

Then during the next 5 months savings rates steadily rose to 5% !!!! - When the first Base rate rise occured in November 2003 to 3.75% - So YES Savings rates rises will occur Long BEFORE the first BOE Interest rate rise.

zag2me

Of course they will rise, its a free market remember, they can offer whatever they want to attract customers.

Deemy

The way I see it by the time the first BOE rate rise occurs, there should be plenty of good fixed rates available at above 5.5% !

cloud_dog

As a previous poster mention though, standard accounts will rise inline with / lag the BOE rate rise(s). I think you are probably referring to the more fixed rate bond (new) accounts which would be far more money market sensitive.

cloud_dog

EricDeeson

equitydealer wrote:

Just noticed that B&B are advertising 2 year bonds at 5.15% and 3 yr at 5.25%. These bonds were not available before, all in anticipation of a rate rise later this year.

Good for savers, bad for mortgage payers!

West Brom one of the few carpet bagger places left) offers 5.25% two year and 5.40% three-year.

Such rates are fixed for the term - how can one find an expert view on where base rates will go over such a long period?

Eric

ManAtHome

Unfortunately you'll find several thousand expert views on base rates...

Most of the stuff I've seen on t'web are showing a rise over the next few years, with BoE rates somewhere between 5% and 5.5% dunno where that would leave savings rates.

Anybody know whether banks etc still have an allowed lending to deposits ratio (I get the impression it's either vanished or is now several billion to one...)?

Milarky

Deemy wrote:

If you look at what happened during the last switch from a down cycle to an up cycle in 2003.

base rates bottomed in June 2003 at 3.5%, so did savings rates at about 3.75% on a typical 1 year fixed rate bond.

Then during the next 5 months savings rates steadily rose to 5% !!!! - When the first Base rate rise occured in November 2003 to 3.75% - So YES Savings rates rises will occur Long BEFORE the first BOE Interest rate rise.

I remember that in mid 2004 - with one further BOE rate rise in the pipeline - fixed rates were suddenly being reduced - and that reduction continued. Remember that the final rise to 4.75 lasted for a whole year. Yet fixed rates effctively 'peaked' more than a year before the BOE made any cut.

schiff

EricDeeson wrote:

West Brom one of the few carpet bagger places left) offers 5.25% two year and 5.40% three-year.

Such rates are fixed for the term - how can one find an expert view on where base rates will go over such a long period?

Eric

Is this why West Brom are known as the baggies?

schiff :rotfl:

steady__eddie

Surely West Brom have an inkling that competitive rates will be higher than 5.25% in 1 to 2 years time and higher than 5.4% in 2 to 3 years time and that, IMO is why they are offering these rates now to lock funds in then.
I'm off to their A.G.M. tomorrow, I'll ask Andrew on his last public appearance before he disappears to survive on his all-singing, all-dancing super-inflated pension.