The Top Fixed Interest Savings Discussion Area

happybagger

I agree the general trend for EA rates is downward, but only slightly. Not to the extent others suggest. I see inflation remaining high for a long term, mainly driven by government polices on energy use and the green agenda, this will be the case regardless of whichever party is in power. I just don't see much likelihood of inflation dropping much from where it is, and with it interest rates.

I fixed as much as I could around 6.2% when it was available believing that to be 'above par' for the medium term.

Archerychick

jaypers said:

With fixed rates generally hovering around the 5% mark at the moment (similar to EA), what are people generally doing at the moment? I’ve probably got more than I need in EA so trying to work out best way forward…….

1) Hedge my bets on Easy Access, which are sure to drop more soon.
2) Lock in a couple of Fixed deals now before they drop some more.
3) Notice Accounts, which are also likely to drop too.

I am also going to use Investment ISA for my 2024/25 allowance rather than cash this time I think.

I have a blended approach, for money that I don’t need access to in the next year - this is in a fix because I think interest rates will drop slightly. I have some fixes ending soon so may consider moving those finds into notice accounts. 

Then savings I need are in instant access accounts. 

JamesRobinson48

Sea_Shell said:

Why don't more providers offer parallel accounts, just either ISA or non ISA?

Is it a cost to administer thing?

I guess it's a mix of things.  First, yes, cost to administer.

Second, some providers may feel they can get away with paying a bit less interest for an ISA, on the basis savers won't have income tax to pay.

Third, on ISA fixed rate bonds, providers must permit early termination by the saver (subject to an interest penalty), whereas for the non ISA equivalent they are under no such obligation. So in that respect the two products have marginally different economics for both provider and saver.

Londonlisa12

happybagger said:

I agree the general trend for EA rates is downward, but only slightly. Not to the extent others suggest. I see inflation remaining high for a long term, mainly driven by government polices on energy use and the green agenda, this will be the case regardless of which party is in power. I just don't see much likelihood of inflation dropping much from where it is, and with it interest rates.

I fixed as much as I could around 6.2% when it was available believing that to be 'above par' for the medium term.

I totally agree, the BoE and the clown  Bailey constantly try to talk sterling down by hinting of an imminent drop in interest rates but inflation is stubborn so they can’t and their are still 2 hawkes wanting a rise in rates on the panel , the last few weeks more and more institutions are pricing in a longer wait for any drop and I can see EA at present rates at least until July.

RosieRooBear

Skipton BS have just launched a two year bond that tracks the BOE rate

2 Year Base Rate Tracker Bond Issue 1

5.25%gross pa/AER variable 
(Annual Interest)

Ready to apply?

This account may be right for you if you:

• are happy with a variable rate that will go up or down in line with changes to the Bank of England Base Rate for 2 years
• have a lump sum of at least £500 to deposit and you don't want to continue to pay in after 06/03/24
• don't need access to your savings during the fixed term
• are aged 16 or over

soulsaver

RosieRooBear said:

Skipton BS have just launched a two year bond that tracks the BOE rate

2 Year Base Rate Tracker Bond Issue 1

5.25%gross pa/AER variable 
(Annual Interest)

Ready to apply?

This account may be right for you if you:

• are happy with a variable rate that will go up or down in line with changes to the Bank of England Base Rate for 2 years
• have a lump sum of at least £500 to deposit and you don't want to continue to pay in after 06/03/24
• don't need access to your savings during the fixed term
• are aged 16 or over

Any payments into this account need to be received on or before 06/03/2024. After this, the account will be closed to future payments in. and: "You can’t withdraw money until the end of the fixed term."

CuparLad

jaypers said:

With fixed rates generally hovering around the 5% mark at the moment (similar to EA), what are people generally doing at the moment? I’ve probably got more than I need in EA so trying to work out best way forward…….

1) Hedge my bets on Easy Access, which are sure to drop more soon.
2) Lock in a couple of Fixed deals now before they drop some more.
3) Notice Accounts, which are also likely to drop too.

I am also going to use Investment ISA for my 2024/25 allowance rather than cash this time I think.

The downward movements we have seen on Easy Access rates to date are more likely a reflection of the commercial and financial circumstances of the institutions concerned rather than a widespread downward sentiment. We haven't seen a great rush to cut rates on Easy Access with most accounts simply being pulled to new customers and/or replaced with new issues at a lower rate. The smaller gap with fixes is more likely a reflection of longer-term sentiment (rates ARE going to fall).

When rates are rising, finacial institutions want to lock in cash at as low a rate as possible as an insurance policy against further rises, but with falling rates ahead, there's no incentive to lock in money now when they can get it cheaper in the future. So any financial institution offering good fixes now is likely trying to refinance more expensive lending and therefore needs to offer a good rate to attract the funds.

Ultimately, it depends a lot on how much value you place on certainty. Fix and you know what you'll get. Go variable (EA or Notice) and you might get a higher return, or a lower one.

pecunianonolet

As they say, interest is the price of risk.

masonic

JamesRobinson48 said:

Sea_Shell said:

Why don't more providers offer parallel accounts, just either ISA or non ISA?

Is it a cost to administer thing?

I guess it's a mix of things.  First, yes, cost to administer.

Second, some providers may feel they can get away with paying a bit less interest for an ISA, on the basis savers won't have income tax to pay.

Third, on ISA fixed rate bonds, providers must permit early termination by the saver (subject to an interest penalty), whereas for the non ISA equivalent they are under no such obligation. So in that respect the two products have marginally different economics for both provider and saver.

I would say the last one is the main one. Though the ISA rules do not limit the penalty that can be imposed. It would certainly be interesting to see a provider bring out a 1 year fixed ISA paying 5.16% to compete with the best conventional fix today, but have a penalty equivalent to 20 years interest if closed or transferred before the end date (essentially wiping out the whole of the capital).

The other reason you won't often see parallel ISA and non-ISA offerings is because several of the top payers don't offer ISAs.

happybagger

masonic said:
 It would certainly be interesting to see a provider bring out a 1 year fixed ISA paying 5.16% to compete with the best conventional fix today, but have a penalty equivalent to 20 years interest if closed or transferred before the end date (essentially wiping out the whole of the capital).

Would the Consumer Protection from Unfair Trading Regs 2008 not extend to financial providers?