MSE News: Should you fix your savings at rock-bottom rates?

"As savings rates continue to plummet, is there any point locking in at ultra-low returns?..."
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  • Gordon_the_Moron
    Gordon_the_Moron Forumite Posts: 1,472
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    Rates can't go much lower and I think you'd be mad to fix for 5 years at around 3%. That said can't see them rising in the next 12 months so a one year fix might not be such a bad thing.

    Using a mixture of regular savers, current account promotions and old fixed rate ISAs I have nothing fixed below 4% and nothing at all below 3%!
    If you don't like what I say slap me around with a large trout and PM me to tell me why.

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  • yossarianuk_2
    yossarianuk_2 Forumite Posts: 1 Newbie
    The Santander 123 account pays 3% interest on a current account if you have more than 3k in it.
  • Does anyone know how long this "Funding for Lending" scheme is going to last?

    It seems that rates will stay depressed until this scheme ends, and then lenders will then have to raise rates. Any idea?
  • Rafter
    Rafter Forumite Posts: 3,850
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    N-b-P,

    Banks can continue to access funding for lending until January 2014. The lending that they have taken at that point has to be paid back 4 years after the start of the scheme, so by mid 2016. Savings rates should start to improve in 2014, but will remain depressed until 2016 compared to what they might otherwise have been had the cheaper funding not been available.

    Most of the savings in UK banks and building societies go to fund mortgages. As you can get mortgages at less than 2.5% at the moment, this is the reason why savings rates are so low.

    The Bank of England believe that if base rate and savings rates were much higher, higher mortgage rates would mean lots of repossessions and house prices would fall. This would hurt banks but they also feel would hurt society as a whole.

    Whether you agree or not probably depends whether you have a lot of savings or a lot of money tied up in property.

    R.
    Smile :), it makes people wonder what you have been up to.
  • torbrex
    torbrex Posts: 71,340
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    My fixed rate ISA matures towards the end of this month and I had been looking around for a good 1 year deal from any of the banks local to me. I narrowed it down to about 3 and made appointments to see about moving the money as soon as the current deal finished. Imagine my surprise to find less than a week later, 2 deals had been slashed in value and the third (my preferred option) had been removed completely :mad:
    I looked around to see if there were any internet deals that might suit my needs but again the rates have been cut so I have arranged to move the money into this years ISA for the period leading up to April in the hope that some better deals are on offer for the new ISA 'season'
  • Consumerist
    Consumerist Forumite Posts: 6,304
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    Rafter wrote: »
    . . . Savings rates should start to improve in 2014, but will remain depressed until 2016 compared to what they might otherwise have been had the cheaper funding not been available. . .
    Sorry to interrupt your conversation with N-b-P but that's a pretty depressing scenario for savers.

    Unfortunately, what you are saying is a logical conclusion from the facts as I see them. :(
    >:)Warning: In the kingdom of the blind, the one-eyed man is king.
  • standinman2009
    standinman2009 Forumite Posts: 118 Forumite
    I cant help feeling its time for a savers revolt where we draw out as much of our savings out as possible for say a period between a week and a month ,even with funding for lending most banks would be crippled through lack of funds and something would have to happen ,ITS TIME TO ACT
  • ViolaLass
    ViolaLass Forumite Posts: 5,764 Forumite
    I cant help feeling its time for a savers revolt where we draw out as much of our savings out as possible for say a period between a week and a month ,even with funding for lending most banks would be crippled through lack of funds and something would have to happen ,ITS TIME TO ACT

    Where do we put our money for that period?
  • standinman2009
    standinman2009 Forumite Posts: 118 Forumite
    the thought is to remove it from the banking system so its obvious !!
  • ViolaLass
    ViolaLass Forumite Posts: 5,764 Forumite
    the thought is to remove it from the banking system so its obvious !!

    You want us to store thousands of pounds under the mattress? Very safe.
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