Interest rate rise?

System

lisyloo wrote: »

My point was the yield increase is significant and that’s without interest raise rises.
It’s poor and has shortfall guarantee but that’s irrelevant to people who are unable to consider other options.

Indeed. The yield increase has recently been eye catching, and that is before the base rate has even risen. Apparently, it is because of the end of the Government's Term Funding Scheme, which has artificially suppressed savings and mortgage rates. Savings rates are expected to continue to rise gradually even if the BoE does not raise.

chucknorris

Ozymandias73 wrote: »

Indeed. The yield increase has recently been eye catching, and that is before the base rate has even risen. Apparently, it is because of the end of the Government's Term Funding Scheme, which has artificially suppressed savings and mortgage rates. Savings rates are expected to continue to rise gradually even if the BoE does not raise.

But it still creates a loss after considering both tax and inflation. Looking the the other side of the situation, we have made over £400k (gross) from saved mortgage interest, since interest rates were reduced 10 years ago.

System

chucknorris wrote: »

But it still creates a loss after considering both tax and inflation. Looking the the other side of the situation, we have made over £400k (gross) from saved mortgage interest, since interest rates were reduced 10 years ago.

Right now I am more interested in return of my capital than return on my capital. And increasing savings rates are just an added bonus.

chucknorris

Ozymandias73 wrote: »

Right now I am more interested in return of my capital than return on my capital. And increasing savings rates are just an added bonus.

That doesn't make sense:
Right now I am more interested in return of my capital than return on my capital

System

chucknorris wrote: »

That doesn't make sense:
]Right now I am more interested in return of my capital than return on my capital

I currently worry more about getting back 100% of my capital than how much it yields.

chucknorris

Ozymandias73 wrote: »

I currently worry more about getting back 100% of my capital than how much it yields.

You won't get 100% of it back, when you take inflation and tax into account, fair enough it won't be far from 100%, but it will be short of it. But I understand why you accept that small loss.

System

chucknorris wrote: »

You won't get 100% of it back, when you take inflation and tax into account, fair enough it won't be far from 100%, but it will be short of it. But I understand why you accept that small loss.

I would rather suffer that small loss than a big loss on the stock market. Rising savings rates are reducing the loss, and may their increase back to normality continue, meaning no further losses. Of course, I accept that reducing liquidity can also be bearish for the stock market, so effectively we are on opposite sides of a trade.

System

Inflation has come in a bit lower than expected today, so I expect expectations of a base rate rise on Aug 2nd have been reduced today. Expectations change back and forth in an instant.

westernpromise

For 9.5 years the property shorts have been gibbering excitedly about how rates are going to start going back up to 15% and it'll be 50% off house prices by Christmas.

I would just get used to the new normal, to be honest - which is rates of < 1% for the foreseeable future, and property shorts gibbering excitedly about how rates are going back up to 15%....

chucknorris

Ozymandias73 wrote: »

Inflation has come in a bit lower than expected today, so I expect expectations of a base rate rise on Aug 2nd have been reduced today. Expectations change back and forth in an instant.

You are correct, I just checked the betfair market and it has changed:

0.50% now about 7/4 (from 5/2)
0.75% now about 4/7 (from 1/3)