fixed rate savings dropping

moneylover

Several of my high interest fixed rates have come to an end and while I have dithered the rates have gone down over the last couple of weeks or so. Is this because the banks/building societies are raising more money on wholesale market? Or is it likely that after the Christmas lull the rates may go up again slightly. Am at a loss to know whether to jump into a couple of fixes (2 year max) or just leaving money in instant access paying 3.2% or so.
Thanks

Reaper

It is (indirectly) because previously the feeling was inflation and therefore interest rates would be heading up soon, but the expection of when that might happen has receeded for now.

I'm afraid it is not possibile to predict future fixed rates any more than variable rates.

opinions4u

The Autumn periods of 2007 and 2008 were packed with turmoil, with Northern Rock, Iceland, HBOS etc wobbling / collapsing.

This means that it's a time when a lot of savers have 1 year products maturing and this pushed savings rates up a little (espeically in the 2 and 3 year markets) as banks and building societies wanted to get their hands on the maturing funds.

As we move in to December the number of 1 year products reaching maturity has reduced sharply, so there's less money about and reduced demand leads to reduce price.

gozomark

It maybe reduced demand, but its also reduced supply if "the number of 1 year products reaching maturity has reduced " - 2 sides of the same coin.

moneylover

so spread my money around between various one and two year rates and presume that whats available now is as good as it will be for a bit?
I am lucky enough to have about £50,000 but am a pensioner...

opinions4u

gozomark wrote: »

It maybe reduced demand, but its also reduced supply if "the number of 1 year products reaching maturity has reduced " - 2 sides of the same coin.

The supply of low rate variable funds remains very much in place though, and providers don't want too many of those customers churning from their 0.5% accounts in to nice juicy 4.25% ones when there's no need to pay rates anywhere near that to encourage the 0.5% customers to move to a new provider.

Rollinghome

Another option would be to look at a variable account like Pathway by Ulster Bank (part of RBS so majority owned by government) currently paying 3.6% including bonus for 6 months and not far off 1 yr fixed rates. Or AA Savings (HBOS) paying 3.30% on £50k also with instant access. The included bonus of 2.8% means it can't fall by much.

At some point it's possible the banks will be looking forward to higher rates and offer better fixed rates accordingly. Or not...

alared

moneylover wrote: »

so spread my money around between various one and two year rates and presume that whats available now is as good as it will be for a bit?
I am lucky enough to have about £50,000 but am a pensioner...

If you already have an instant access account paying 3.2% that`s where to put it until we see how rates go in the new year.

If you don`t have one,then you`ll be struggling to find one now paying 3.2%.

rb10

alared wrote: »

If you already have an instant access account paying 3.2% that`s where to put it until we see how rates go in the new year.

If you don`t have one,then you`ll be struggling to find one now paying 3.2%.

Well, you can get 3.15% from the AA, which isn't far off.

G_M

Investec's High Five pays 3.34% at present. 3 months notice required (and min £25K), but you can give notice immediately and then review in the new year and cancel the notice if you decide to stay with them.

See the referrers board here for an account-opening bonus.

alared

rb10 wrote: »

Well, you can get 3.15% from the AA, which isn't far off.

Earn 3.15% gross p.a./AER on balances from £1 up to £49,999. Rate includes a 12-month bonus of 2.65% gross p.a.
Do you still get the bonus if you close it early?

AA Internet Extra (Issue 1) account is unavailable to joint account holders.

AA Financial ServicesHBOS (owned by AA and HBOS)