Have UK savings rates peaked in Oct 2022?

Millyonare

A lot of chatter that UK savings rates % may have peaked, today, around Oct 17, 2022. Some say the upcycle is over. The new Chancellor (Hunt) has settled markets, future swap rates have dropped, and future BoE interest rates may not need to rise as high as expected.

Yes
Maybe
No

Discuss.

All views welcome. For and against. Please say why.

EssexHebridean

Could you provide some sources for the “chatter” please - preferably reliable ones from experts in the field. It’ll help to clarify who’s making the suggestions so views can be taken on the reliability of such suggestions.

Swipe

So no more BOE rate hikes for the next few months then? 

Millyonare

Loads of chatter out there, on forums and in newspapers.

RG2015

The BoE interest rate hikes are to combat inflation.

Sadly there is no suggestion that inflation will fall in the near future. Hence interest rates will continue to rise although perhaps not as steeply.

HeyYeah

In the FT today it says that futures markets are pricing in an interest rate peak of 5.25% in May (prev 6% before the policy changes). While in the Guardian today, "Goldman analysts believe UK interest rates will now peak at 4.75%, slighter lower than the 5% previously factored in.". So I'd expect saving rates to also go up. 

The_Green_Hornet

Bear in mind that economic predictions are invariably wrong and that the media usually pick economists whose forecasts match their political world view.

mark_cycling00

Or they take a phrase from a sensible prediction out of context to make it more extreme and click-baity.

Below is one of those "research notes" that gets put out by an investment bank. Other viewpoints exist.

https://research.berenberg.com/report/B4DDC211F40B69E30FACA5AC9535465B

Question now is do you also buy up some income stocks now offering an 8-9% yield?

Albermarle

HeyYeah said:

In the FT today it says that futures markets are pricing in an interest rate peak of 5.25% in May (prev 6% before the policy changes). While in the Guardian today, "Goldman analysts believe UK interest rates will now peak at 4.75%, slighter lower than the 5% previously factored in.". So I'd expect saving rates to also go up. 

The financial City lady (I do not remember her name or where she was from) interviewed on the BBC news yesterday seemed to think there would be a 1 % rise between now and the end of the year, and that would be it. So max Bof E rate of  3.25%. Or at least to 3.25% then a pause, to see how bad the economy is performing in the dark ,post Xmas Winter months.
As at least some of the rises are already factored into savings rate offers, then future rises may be a bit less than many expect.

isasmurf

Peak? No. But if gilt yields remain below recent week peaks and the investment markets don't have the volatility seen recently, there will be less need for cash from savers for some institutions. Mortgage rates had priced in an expected 6% bank rate and will need to be adjusted in light of yesterday, which in turn will affect savings rates. I'd expect the top of the rates to be slightly lower than recently for a short period before rising again. 

Desk

isasmurf said:

 I'd expect the top of the rates to be slightly lower than recently for a short period before rising again. 

Are you referring to easy access or fixed rates?

Currently, you can get a five year fix at 5 per cent, but this is surely based on where the base rate is anticipated to peak? It doesn't have much to do with where the base rate currently sits at 2.25 per cent.

It's surely not as if the base rate is going to reach 5.25 per cent as is now expected, and that a five year fixed at that point will be offering you 8 per cent - tracking 2.75 point above the base rate?