Following today's announcements, grab a deal now or wait until November?

lohr500

Until today I was prepared to sit tight and wait until November to see what happened with the interest rate before committing funds.
I see Santander have pulled their 2.75% easy access saving a/c (which I grabbed last week).
What do you think will happen now? I am torn between grabbing what's on offer now, or sitting tight for a few weeks??!!   

wmb194

lohr500 said:

Until today I was prepared to sit tight and wait until November to see what happened with the interest rate before committing funds.
I see Santander have pulled their 2.75% easy access saving a/c (which I grabbed last week).
What do you think will happen now? I am torn between grabbing what's on offer now, or sitting tight for a few weeks??!!   

Grab something now and think about it. They usually have seven day+ deposit windows. If you don't make a deposit the account will just be closed.

bristolleedsfan

lohr500 said:

I see Santander have pulled their 2.75% easy access saving a/c (which I grabbed last week).
  

https://www.santander.co.uk/personal/savings-and-investments/savings/esaver

pearl123

Everything will get rocky again. I suspect interest rates will still rise steadily. 

Oasis1

From what I've read, I'm still expecting BoE to increase interest rates by 0.5-0.75%. If Truss goes, maybe markets will respond well and the increase will be less. But it'll still be an increase.

So I'm putting £20k into an easy access ISA, and will then transfer if any better options come along, including any 1yr fixed rates for 4%+.

Desk

Oasis1 said:

From what I've read, I'm still expecting BoE to increase interest rates by 0.5-0.75%. If Truss goes, maybe markets will respond well and the increase will be less. But it'll still be an increase.

So I'm putting £20k into an easy access ISA, and will then transfer if any better options come along, including any 1yr fixed rates for 4%+.

isn't it the case, though, that the further expected hikes to the base rate are already factored into the banks and building society's current fixed rate offerings?

Your top five year fix is currently about 5%. As we stand today, the base rate is projected to climb up to peak at 5.25% next year before coming back down. The offer of 5% considers the fact that the base rate will surpass this for a while, but that the savings offer will offer something that averages better than the base rate over the course of the full five years.

I wonder if the offers have now peaked, and unless there's something to change the base rate projections (such as inflation that goes higher or becomes more embedded than expected), we might not see much better than this, and indeed that these offers might now fall back somewhat.

One thing I'm keen to see is the latest inflation figures which come out on Wednesday. If there's something there to suggest that inflation has peaked, or is close to peaking, it would seem it might be time to jump into a fix. If inflation is surprisingly higher than had been expected, perhaps hang on a bit longer.

Thumbs_Up

A trillion pounds has been pumped into the system since the markets turbulence back in 2008.

Relax, inflation is heading north, so put on your warm jackets and hunker down for the big chill.  

lohr500

bristolleedsfan said:

lohr500 said:

I see Santander have pulled their 2.75% easy access saving a/c (which I grabbed last week).
  

https://www.santander.co.uk/personal/savings-and-investments/savings/esaver

I should have been more specific! They are closing the current offer from midnight tonight

NedS

Desk said:

Oasis1 said:

From what I've read, I'm still expecting BoE to increase interest rates by 0.5-0.75%. If Truss goes, maybe markets will respond well and the increase will be less. But it'll still be an increase.

So I'm putting £20k into an easy access ISA, and will then transfer if any better options come along, including any 1yr fixed rates for 4%+.

isn't it the case, though, that the further expected hikes to the base rate are already factored into the banks and building society's current fixed rate offerings?

Your top five year fix is currently about 5%. As we stand today, the base rate is projected to climb up to peak at 5.25% next year before coming back down. The offer of 5% considers the fact that the base rate will surpass this for a while, but that the savings offer will offer something that averages better than the base rate over the course of the full five years.

I wonder if the offers have now peaked, and unless there's something to change the base rate projections (such as inflation that goes higher or becomes more embedded than expected), we might not see much better than this, and indeed that these offers might now fall back somewhat.

One thing I'm keen to see is the latest inflation figures which come out on Wednesday. If there's something there to suggest that inflation has peaked, or is close to peaking, it would seem it might be time to jump into a fix. If inflation is surprisingly higher than had been expected, perhaps hang on a bit longer.

Something like shortening the Energy Price Cap from 24 months to 6 months, which now puts energy prices firmly back in the melting pot for inflation in 12 months time should energy prices rise significantly in April 2023.

Until inflation is falling and firmly under control, expect interest rates to continue to rise / stay high.

Albermarle

Desk said:

Oasis1 said:

From what I've read, I'm still expecting BoE to increase interest rates by 0.5-0.75%. If Truss goes, maybe markets will respond well and the increase will be less. But it'll still be an increase.

So I'm putting £20k into an easy access ISA, and will then transfer if any better options come along, including any 1yr fixed rates for 4%+.

isn't it the case, though, that the further expected hikes to the base rate are already factored into the banks and building society's current fixed rate offerings?

Your top five year fix is currently about 5%. As we stand today, the base rate is projected to climb up to peak at 5.25% next year before coming back down. The offer of 5% considers the fact that the base rate will surpass this for a while, but that the savings offer will offer something that averages better than the base rate over the course of the full five years.

I wonder if the offers have now peaked, and unless there's something to change the base rate projections (such as inflation that goes higher or becomes more embedded than expected), we might not see much better than this, and indeed that these offers might now fall back somewhat.

One thing I'm keen to see is the latest inflation figures which come out on Wednesday. If there's something there to suggest that inflation has peaked, or is close to peaking, it would seem it might be time to jump into a fix. If inflation is surprisingly higher than had been expected, perhaps hang on a bit longer.

Projections for peak Bof E rate vary between 3.25% and 5.25%. so might as well use a middle figure of around 4%.
As Neds, says if outlook for inflation remains on the high side, these higher rates may persist. On the other hand the cost of living crisis, higher interest rates, general post Xmas doom and gloom and a shrinking economy, might mean they go into reverse quite quickly.

[Deleted User]

Albermarle said:

Projections for peak Bof E rate vary between 3.25% and 5.25%. so might as well use a middle figure of around 4%.
As Neds, says if outlook for inflation remains on the high side, these higher rates may persist. On the other hand the cost of living crisis, higher interest rates, general post Xmas doom and gloom and a shrinking economy, might mean they go into reverse quite quickly.

Seems a reasonable guesstimate but with huge uncertainty on both sides.

Scrapping the energy package (should) be expected to cause inflation to jump significantly and I don't think that's priced into markets yet. Plus generally speaking inflation is "sticky" so interest rate projections on the low end should in my view be treated with scepticism (much as the BOE's endless promise of "we WILL raise UK interest rates in a few months" kept the markets happy for over a decade, despite it becoming more and more obviously untrue).

On the other hand, if the Ukraine war ends suddenly, maybe inflation suddenly drops through the floor and we'll be cursing that we didn't go all-in on bonds @ current yields! Plus, if interest rates do rise much more, the resultant rise in mortgage costs would crush house prices so perhaps that stays the BOE's hand even if inflation does start becoming a touch hyper?

Scary times!