MSE News: Should you fix your savings at rock-bottom rates? 14 December 2012 at 10:13AM in Savings & investments 26 replies 4.2K views

Former_MSE_Helen

"As savings rates continue to plummet, is there any point locking in at ultra-low returns?..."

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Should you fix your savings at rock-bottom rates?

Gordon_the_Moron

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%!

yossarianuk_2

The Santander 123 account pays 3% interest on a current account if you have more than 3k in it.

Nicholas-bloody-Parsons

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

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.

torbrex

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

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.

standinman2009

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

standinman2009 wrote: »

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

the thought is to remove it from the banking system so its obvious !!

ViolaLass

standinman2009 wrote: »

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.