Two more building societies increase interest rates

silvercar

I've got an offset that is bigger than I needed. Within a month of moving home the finances were juggled around so that there is a large pot in the offset effectively reducing the mortgage to the level we first intended.

We decided on this as (a) it didn't cost anything and provides a cash buffer should we ever need it. (b) allows a real cheap rate of borrowing (life time BOE base rate tracker at BOE base + 0.75%), so eg a car loan can be had at currently 1.25% just by taking from this pot rather than taking a separate loan. It only worked out because the LTV even with the extra pot is still very low.

baby_boomer

I don't often back Carol but the BSs have a problem because of their savings outflows over the last year (helped by MSE publicity which identifies the best deals for everyone).

Higher mortgage rates are their only solution.

BSs are usually seen as a restraint on mortgage rates but if their share of the new mortgage market has dropped to 13% from 18% as recently reported, then they aren't in a position to influence the mortgage market to the same extent.

Would you rely on banks who have to pay back the heavily indebted taxpayer as the best way of keeping mortgage rates down?

Do sign up below if that's your hope for the future .

carolt

baby_boomer wrote: »

I don't often back Carol but

Do you not?

Never noticed...

Graham_Devon

Harry_Powell wrote: »

Now that you can put £5k in a cash ISA and £10k in an S&S ISA, I'd imagine that offsets would go into decline.

Totally off topic, but I took 3 years of ISA savings out of my ISA and put them into savings accounts.

Over a year later, still haven't used the ISA. Normal savings accounts were paying 2% more in some cases, which is better than the tax saving, especially when it's compoundedeach month.

Anyway, carry on as you were, have no idea why I felt compelled to say that!

Mr.Brown_4

chucky wrote: »

imy personal preference... if i could have got a cheap one was an offset mortgage

Lol. The problem with an offset is that you need something to actually like er do the offsetting bit, like some money... lol.

Anyway I digress as usual. Well done Carol for the info about more building societies increasing rates. Fairly important info on this board one would have thought. Followed by the usual stuff from the usual suspects.

I can only think that those who post most often and aggressively must be in deep water themselves. Because why else would anyone bother? Building society increases rates.... four pages later... unbelieveable.

For me the more some people bull up the market, the less I think you are in an enviable financial position, and the more scared I think you are. If I were as wealthy as some on here claim to be, I wouldn't be on here that's for sure.

Harry_Powell

Graham_Devon wrote: »

Totally off topic, but I took 3 years of ISA savings out of my ISA and put them into savings accounts.

Over a year later, still haven't used the ISA. Normal savings accounts were paying 2% more in some cases, which is better than the tax saving, especially when it's compoundedeach month.

Anyway, carry on as you were, have no idea why I felt compelled to say that!

It's interesting how the new higher ISA contribution rates will change people's 'use it or lose it' mindset. More people will be happy to move money in and out of ISAs as you've done because the contribution level is not so restrictive.

However, are you sure you're beating the ISA rates with your normal deposit account? I think you're taxed on the interest before you receive it, so you're losing 20% of that interest. I use an S&S ISA so I've no idea of the cash isa rates.

Graham_Devon

Harry_Powell wrote: »

It's interesting how the new higher ISA contribution rates will change people's 'use it or lose it' mindset. More people will be happy to move money in and out of ISAs as you've done because the contribution level is not so restrictive.

However, are you sure you're beating the ISA rates with your normal deposit account? I think you're taxed on the interest before you receive it, so you're losing 20% of that interest. I use an S&S ISA so I've no idea of the cash isa rates.

Say my interest is £100 each month. I get the £100 and at the same time, get £20 taken off that. So get £80 interest.

That £80 then earns interest for the following month.

With my ISA, it was I think 1.25% at the time, and this account at the time was 3.2%. The ISA also paid yearly. So was missing out I felt.

silvercar

With my ISA, it was I think 1.25% at the time, and this account at the time was 3.2%. The ISA also paid yearly. So was missing out I felt.

3.2% gross would be 2.56% for a basic rate tax payer or 1.92% for a higher rate payer. Both beat the 1.25% ISA rate. The monthly/ yearly effect is peanuts in comparison.

Charterhouse

Graham_Devon wrote: »

Totally off topic, but I took 3 years of ISA savings out of my ISA and put them into savings accounts.

Over a year later, still haven't used the ISA. Normal savings accounts were paying 2% more in some cases, which is better than the tax saving, especially when it's compoundedeach month.

Anyway, carry on as you were, have no idea why I felt compelled to say that!

Wow, what amazingly terrible advice.

Harry, why do you think anyone who overpays is bonkers?

I am a higher rate taxpayer, with a 4.89% fixed rate mortgage. By overpaying 10% I effectively earn 4.89/0.6 (0.5 next year) = 8.15% on my money. That's better than any asset class will return in 2010 in my opinion.

Thrugelmir

Charterhouse wrote: »

Wow, what amazingly terrible advice.

Harry, why do you think anyone who overpays is bonkers?

I am a higher rate taxpayer, with a 4.89% fixed rate mortgage. By overpaying 10% I effectively earn 4.89/0.6 (0.5 next year) = 8.15% on my money. That's better than any asset class will return in 2010 in my opinion.

and there's no risk to capital.