MSE News: A year at 0.5% base rate: what next for savers & borrowers?

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"The Bank of England today held the official interest rate, 12 months after it fell to its historic low ..."

Read the full story:
A year at 0.5% base rate: what next for savers & borrowers?

bb_forrest

For me the year at this rate has been great, I'm on an ING Direct Tracker so am paying 1.39%.

I'm also paying off far more than my monthly payment so am now approximately 3 years off paying off the mortgage.

I've got a Cash ISA with about £3000 in in case of needing funds but have decided to forego buying a new car or anything like that until I have paid for the house.

chardir

MSE said: "If you want to guarantee to beat inflation, for savings up to £15,000, National Savings & Investments (NS&I), the Government run bank, has index-linked savings paying 1% above the Retail Prices Index inflation figure (currently 3.7%), tax-free, though the money is locked away for three years. That pays 4.7%, after tax."

Please stop quoting this erroneous 4.7%.

It paid 4.7% to anyone who invested more than a year ago (and who cashes in this month).

Sceptic001

chardir wrote: »

"If you want to guarantee to beat inflation, for savings up to £15,000, National Savings & Investments (NS&I), the Government run bank, has index-linked savings paying 1% above the Retail Prices Index inflation figure (currently 3.7%), tax-free, though the money is locked away for three years. That pays 4.7%, after tax."

Please stop quoting this erroneous 4.7%.

It paid 4.7% to anyone who invested more than a year ago (and who cashes in this month).

Also they are not "locked away for three years". They can be cashed in at any time but don't get any interest if cashed in in the first year.

ray123

'MPC set two-year target of 1-3% for inflation.'
Looks like inflation is here to stay, for the next two years at least. The IMF are actually encouraging inflation of 4%!
http://www.guardian.co.uk/world/richard-adams-blog/2010/feb/12/imf-financial-crisis-failure

National Savings & Investments (NS&I) index-linked savings look like a good option (as Chardir states above)!

manic_saver

As a saver i will be transferring my isa (10 grand) to A&L at 2.75% and opening a new isa with new funds at the same place at 3.5%.

As i have a tracker mortgage at around 1% quite happy to put more aside each month and hopefully pay off more on my mortgage when the time comes.

I think for people that have retired its not all good news, especially when there getting next to nothing in return. I've got another 30 odd years before i retire, so lets hope the same situation doesn't happen again for some time.

Gorgeous_George

Taken in isolation, low interest rates are good news for me. With two base rate lifetime trackers my mortgage payments are really low.

The residential one is also an offset. I moved the offset cash (about 50% of the amount outstanding on my mortgage) to a West Bromwich bond paying 4.3%. In effect, the (West Brom) savings' interest pays the (Britannia) mortgage interest and gives me £288 per year on top.

My ISAs are with Northern Rock with rates stepping up from 3.5% in Year 1.

Of course, the economic mess that the country is in tarnishes the joy somewhat.

GG

Soon_to_be_OAP

manic_saver wrote: »

As a saver i will be transferring my isa (10 grand) to A&L at 2.75% and opening a new isa with new funds at the same place at 3.5%.

As i have a tracker mortgage at around 1% quite happy to put more aside each month and hopefully pay off more on my mortgage when the time comes.

I think for people that have retired its not all good news, especially when there getting next to nothing in return. I've got another 30 odd years before i retire, so lets hope the same situation doesn't happen again for some time.

Manic Saver, I think you will find that the UK Govt does not allow you to hold more than one ISA.

chris_m

Surely the rule is that you may only contribute to one in any one tax year? Nothing wrong with having others from previous years and not adding any more funds to them?

rb10

Soon_to_be_OAP wrote: »

Manic Saver, I think you will find that the UK Govt does not allow you to hold more than one ISA.

chris_m wrote: »

Surely the rule is that you may only contribute to one in any one tax year? Nothing wrong with having others from previous years and not adding any more funds to them?

Chris is correct here - you can open as many as you like, and transfer existing ISAs around as much as you like.

The restriction is on paying new money into ISAs - and this can only go into one account per year.

ManAtHome

Well, savings rates have been creeping up even though there has been next to no demand for 'credit' (apart from the govt of course). Personal debt has stayed pretty much the same, and business debt has dropped - makes you wonder what will happen when things start picking up...

Ray (post 5) - MPC target has been 1-3% for several years now (target 2% with 1% 'wiggle room' either side), so no real change. Of course CPI has been above target more often than not ('saved' by the recession...), and they always trot out the 'high now, but will be below target in 2 years' - that's allegedly what their policy is set for.