Will interest rates rise next month?

sevenhills

Bigwheels1111 said:

I feel sorry for people that they are paying more now.

I helped 3 family and friends remortgage early this year, for 5 year fixed at great rates.

The forth did not want to know and now is up SXXT street.

But you cant help everyone.

I guess the people that do not fix for 5/10 years are just gambling and taking the cheaper short term rates.

phillw

sevenhills said:
I guess the people that do not fix for 5/10 years are just gambling and taking the cheaper short term rates.

MSE is basically a gambling website.

The obvious choice when rates were low would be to be to fix for as long as possible.
When rates were high then trackers were a more obvious choice.

The obvious choice isn't always right of course, because we don't know what will happen in those ten years. It too is a gamble.

DoneWorking

When do people think the BoE interest rate increase will filter through to the savings providers 

cricidmuslibale

DoneWorking said:

When do people think the BoE interest rate increase will filter through to the savings providers 

Not all savings providers will necessarily raise their rates in response to the B of E base rate increase, and even if they do, they may well only pass on part of that increase to their savers. It can take 3 to 4 weeks after the B of E make their move for some savings providers to respond with any amount of increase to their savings account interest rates, in my experience.

phillw

DoneWorking said:

When do people think the BoE interest rate increase will filter through to the savings providers 

Some providers will already have priced in what they expect the November rise to be.

I think the autumn statement on 23rd November is going to be far more important.

cricidmuslibale

phillw said:

DoneWorking said:

When do people think the BoE interest rate increase will filter through to the savings providers 

Some providers will already have priced in what they expect the November rise to be.

I think the autumn statement on 23rd November is going to be far more important.

Yes you’re on the right lines but the autumn statement is actually on 17th November!

cwep2

DoneWorking said:

When do people think the BoE interest rate increase will filter through to the savings providers 

Rates have been historically low for much of the last 2 years, but starting to rise again now. We can look at the last rise: 22nd September they raised by 0.5% from 1.75% to 2.25%. Note that half market was expecting a larger hike, so this was less than the average expectation.

Just looking at those savings accounts that were *above* 1.75% on 21st September
Cynergy (1.85%) moved to 2.12% about 2 weeks later then went to 2.75% to match Santander a week after that.
Al Rayan (2.1%) moved to 2.35% about 1 week later then went to 2.81% to counter Santander 2 weeks after that.
Zopa (1.85%) took 3 weeks to move to 2.15% where they have been since.
Ford Money (1.95%) moved to 2.5% almost a month later, this move happened after Santander entered the market.

There are others I've missed off but I'm excluding those that limit deposit size <£10k/ # withdrawals. Other banks like Marcus, Atom moved but weren't in the top 3 rates and these 4 have been in the top 6-7 rates for much of the last few months, if you exclude banks that 1) limit deposits to less than £10K, 2) limit # withdrawals per year. 

Key takeaways here:
1. it takes weeks for banks to react.
2. 0.25%-0.30% was a typical initial move for the top paying accounts, which was less than the 0.5% base rate change.
3. Santander coming in with a much higher rate than available anywhere else (by 0.4% at the time!) had a bigger impact on best buy rates at both Cynergy and Al Rayan that had already reacted to the BoE rate hike. 

The fact that Santander have now pulled their high paying account and the best non-Sharia instant access account available today for >£10k allowing >5 withdrawals per year is Tesco at 2.21% seems to suggest that the 'initial' moves by Zopa, Cynergy, Al Rayan were probably 'fair' for a base rate hike of 0.5%. So if we see 0.5% again I would expect 2.35-2.75 to become more common after 2-3 weeks by the likes of Marcus, Atom, RCI, Aldermore etc. and maybe some of those that closed off to new account holders will open their doors again.

DoneWorking

cricidmuslibale said:

phillw said:

DoneWorking said:

When do people think the BoE interest rate increase will filter through to the savings providers 

Some providers will already have priced in what they expect the November rise to be.

I think the autumn statement on 23rd November is going to be far more important.

Yes you’re on the right lines but the autumn statement is actually on 17th November!

So looks like waiting until at least December before going for a one year fixed ISA

Thumbs_Up

DoneWorking said:

So looks like waiting until at least December before going for a one year fixed ISA

I’m waiting for interest rates raising as high as they will go, equally waiting for house prices to tumble. It’s going to happen I can feel it in my bones...but when...

 

cricidmuslibale

Thumbs_Up said:

DoneWorking said:

So looks like waiting until at least December before going for a one year fixed ISA

I’m waiting for interest rates raising as high as they will go, equally waiting for house prices to tumble. It’s going to happen I can feel it in my bones...but when...

 

That’s given me a really good chuckle! Thank you!