Fixed rate investment should I wait for int. rate decision?

coal32

I'm wanting to invest in a fixed rate bond. Should I wait for the interest rate decision? I mean will the banks/building societies bring in new rates for their products?

any advice thanks

oldfella

yes - wait for next Thurs

dwsjarcmcd

Fixed rates bonds are priced against the money markets, not BoE rates. These tend to move based on the speculation of increased rates, not the actual event. These money market rates have already moved significantly upwards and most banks and building societies have priced these in within their products.
The real question is whether money market rates will move further upwards in anticipation of another increase, post May!

nilrem_2

I would say it depends on what you are doing with the money you intend to save at the moment, if it is earning a decent amount then leave it for a few weeks to see what any increased rates do to fixed rate accounts, bear in mind that many institutions are very tardy when raising rate and they do nowt for several weeks after a BOE rise. If the cash is generating a very low interest then go for a decent fixed rate now otherwise any extra return gained by waiting for a higher rate will be lost by your money sitting in abeyance in a low interest account.

coal32

hey thanks guys, learned something new today.
So something like Birmingham midshires currently offering 6.23% probably won't go higher cause it's taken May's rate rise into account.yes? Plus i'm only getting 4.2% now. So i'm gonna transfer to that.
cheers.

nilrem_2

coal32 wrote: »

hey thanks guys, learned something new today.
So something like Birmingham midshires currently offering 6.23% probably won't go higher cause it's taken May's rate rise into account.yes? Plus i'm only getting 4.2% now. So i'm gonna transfer to that.
cheers.

FWIW I have also just invested in that one, well I went for the monthly interest option which when compounded works out around the same rate.

I was in the position of having a previous bond that matured today as it happens so I was in the predicament that I mentioned above I decided that any interest gained by waiting for a possible higher rate would largely be 'eaten' up by the interest lost whilst pondering!

MABLE

I took out a Coventry fixed rate bond at 6.15% a few weeks ago. However I see they have now reduced the rate for new applicants. I thought this was strange bearing in mind the outlook for interest rates. However after reading some of the posts I can now see why.