Fixed or easy access

oz0707

I know all situations are unique so advice can't be given but what are people thoughts on fixed vs easy access atm. 

I know base rates may top the current 1 year fix rates soon, hence my hesitation to go for a 1 year fix atm. The November mpc meeting could see a large rise, do we think this is already priced in to current 1 year fixed deals?

Think I'd rather loose 5% to inflation rather than 7 or 8% atm

lohr500

Personally I am waiting to see what happens after the November meeting before committing to any fixed deals.
 
I am expecting some funds from all our cashed in Premium Bonds in early November and in the meantime I have put another chunk of cash into the recently launched 2.75% Santander easy access a/c. When the PB cash arrives, I will park that into the Santander a/c as well.

Then see what's on offer in November. General consensus seems to be that saving rates will increase further, so for me it makes sense to sit tight for a few more weeks. 

I think we will then look at a combination of new 1 year fix cash ISAs (for tax reasons) and regular easy access / notice a/cs to distribute the cash to give us the best returns whilst making some funds quickly accessible in case of any emergencies. 
  

   

Bigwheels1111

I was holding out for 5 year fixed at 5% and expecting to wait untl Feb 2023.

Now with 3 more BOE rises in the pipe line Im stashing cash in easy access, Santander,Cynergy and Al Ryan.

I need an income after selling my rental property and 5 or 6% is a better return than renting for me.

Less risk etc. But each 1% extra makes a big difference to me.

Still keeping an emergency fund in easy access just in case.

I will not fix until Feb as a minimum.

Desk

Is it really likely that the fixed rate savings accounts will increase further, or are the next and future increases in the base rate by the Bank of England already priced in?

I, too, was holding out for 5 per cent as the golden point - a return I couldn't even have imagined this time last year, after 14 years of virtually zero return. My fear now is that greed gets the better of me, I hold out for just a little bit more, or even a little bit more after that, and suddenly those offers disappear and I'm bitterly regretting not just taking what I'd hoped for in the first place.

Then again, lock in too early and you'll kick yourself at the prospect of five years stuck at a lower rate than you could have had if you'd just held your nerve.

jaypers

My plan was to put about 50% of my cash savings into Fixed accounts but split into 4 and filtered in 3 monthly periods (25% per quarter). Opened the first account in August and that 3.2% looks a bit weak now. Still think it’s a good strategy though and hoping for 5% with my November transfer after the BOE announcement. 

lohr500

@Desk To add to my earlier post I will definitely bite the bullet in November once the PB money comes through and grab the best of what is available at the time, rather than waiting too long and finding I miss out.

I don't understand enough about what impact yesterday's Govt circus show will have on the base rate and if it will result in a slow down on savings rate rises.

I think the trick is going to be to get the balance right between interest rate and the length of the fix. Then if rates do continue to increase at least there is the opportunity to jump ship and start again.

jaypers

lohr500 said:

@Desk To add to my earlier post I will definitely bite the bullet in November once the PB money comes through and grab the best of what is available at the time, rather than waiting too long and finding I miss out.

I don't understand enough about what impact yesterday's Govt circus show will have on the base rate and if it will result in a slow down on savings rate rises.

I think the trick is going to be to get the balance right between interest rate and the length of the fix. Then if rates do continue to increase at least there is the opportunity to jump ship and start again.

I certainly wouldn’t consider anything longer than a 1 year fixed.

Desk

jaypers said:

lohr500 said:

@Desk To add to my earlier post I will definitely bite the bullet in November once the PB money comes through and grab the best of what is available at the time, rather than waiting too long and finding I miss out.

I don't understand enough about what impact yesterday's Govt circus show will have on the base rate and if it will result in a slow down on savings rate rises.

I think the trick is going to be to get the balance right between interest rate and the length of the fix. Then if rates do continue to increase at least there is the opportunity to jump ship and start again.

I certainly wouldn’t consider anything longer than a 1 year fixed.

Why? The BoE’s stated aim is to get inflation back down to around 2.5% at which point they will ease off on the base rate.

Inflation may be stickier in U.K. than elsewhere, but a global recession is on the cards and the suggestion is that the Fed may be reaching the upper limits of where it’s going to hike the base rate.

In the U.K., the base rate hikes have a political ceiling of what the country is able to stomach around mortgages, and it will take a good few years for those markets to adjust to QT and the return of rates.

Meanwhile, as long as you don’t need the money, you can have a sum locked away for five years at a guaranteed 5 per cent, which was the historical average base rate and comes with none of the volatility or uncertainty of the stock market.

lohr500

@Desk In my case, the cash I am looking to deposit is what I call our "emergency fund", so I don't want it locked away for years.
We already have a chunk of cash in longer term investments making up our retirement planning portfolio.

I just want to maximise the interest return over the next 12 to 24 months whilst maintaining easy access to most of the funds.

The only longer term fix I may look at is maxing out our cash ISA allowances this financial year and next on a 2 or 3 year fix but ONLY if the rates are significantly higher. At least with a fixed cash ISA you can bail out early at the cost of 60/90/120 days interest depending on term length and institution. I would need to do the maths at the time to see if this was an option worth considering. Chances are, we wouldn't need to access the funds placed in a longer term fixed cash ISA but you never know what is round the corner. Especially living in an ancient converted farmhouse with no mains water or sewage!!!

oz0707

That is a consideration penalties for early access. I though with these type of 1 year fixes you can usually withdraw with loss of interest?

oz0707

jaypers said:

My plan was to put about 50% of my cash savings into Fixed accounts but split into 4 and filtered in 3 monthly periods (25% per quarter). Opened the first account in August and that 3.2% looks a bit weak now. Still think it’s a good strategy though and hoping for 5% with my November transfer after the BOE announcement. 

Doesn't seem a bad plan