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Will interest rates go up anytime soon?

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I want to move my Isa with Virgin that pays very little.. (0.40%) shall I wait or do you think interest rates won't go up gain?

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  • ForumUser7
    ForumUser7 Posts: 2,185 Forumite
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    Virgin Money are currently offering a 3% variable rate flexible ISA. Perhaps you'd want to move to this in the meantime. Have a look at the ts and cs, maybe it's for you. N.B. You must hold a current account with them

    easy_access_cash_isa_exclusive_issue_2
    If you want me to definitely see your reply, please tag me @forumuser7 Thank you.

    N.B. (Amended from Forum Rules): You must investigate, and check several times, before you make any decisions or take any action based on any information you glean from any of my content, as nothing I post is advice, rather it is personal opinion and is solely for discussion purposes. I research before my posts, and I never intend to share anything that is misleading, misinforming, or out of date, but don't rely on everything you read. Some of the information changes quickly, is my own opinion or may be incorrect. Verify anything you read before acting on it to protect yourself because you are responsible for any action you consequently make... DYOR, YMMV etc.
  • borderline
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    Virgin Money are currently offering a 3% variable rate flexible ISA. Perhaps you'd want to move to this in the meantime. Have a look at the ts and cs, maybe it's for you. N.B. You must hold a current account with them

    easy_access_cash_isa_exclusive_issue_2
    I don't have a current account with them.. I was looking at their 1 year fix 3,85%
  • savit4l8er
    savit4l8er Posts: 306 Forumite
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    edited 5 November 2022 at 12:34PM
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    If you have a look over the past month or so, there are many asking the same question. I hindsight, you can say yes in most cases but nobody can predict forward with any certainty.  Have a look over the other threads.

    Examples

    https://forums.moneysavingexpert.com/discussion/6397672/wait-or-fix#latest

    https://forums.moneysavingexpert.com/discussion/6389519/open-isa-or-wait-another-month/p1

    There are more discussions within other threads as well  
    Yeah, cheers but nah, I will stick with yes,  thank you and no. 

    Thank you. 
  • Bridlington1
    Bridlington1 Posts: 2,689 Forumite
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    There's very little doubt that interest rates will continue to go up in the current environment. The question is by how much. Whether or not you should fix at the moment is a question many would like to know the answer to and the truth is, no one knows. It fundamentally boils down to whether or not the average interest rate on an easy access ISA over the next 12 months will be greater than the current interest rate on the top paying 1 year fix. At the moment the top 1Y fixed rate ISA pays 3.9%, the top easy access pays 3%. A very rough rule of thumb would be, do you think that this time next year the top easy access ISA will pay more than 4.8%? If the answer is yes you are most probably better off with easy access, if you think the answer is no, you are most probably better off opting for a fix.

    One thing's for certain though, at 0.4%, your current ISA should most certainly be switched as there are dozens of easy access ISAs paying significantly more. You can switch an ISA very easily so if rates do go up elsewhere you can always switch again. 
  • Oasis1
    Oasis1 Posts: 717 Forumite
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    There's very little doubt that interest rates will continue to go up in the current environment. The question is by how much. Whether or not you should fix at the moment is a question many would like to know the answer to and the truth is, no one knows. It fundamentally boils down to whether or not the average interest rate on an easy access ISA over the next 12 months will be greater than the current interest rate on the top paying 1 year fix. At the moment the top 1Y fixed rate ISA pays 3.9%, the top easy access pays 3%. A very rough rule of thumb would be, do you think that this time next year the top easy access ISA will pay more than 4.8%? If the answer is yes you are most probably better off with easy access, if you think the answer is no, you are most probably better off opting for a fix.

    One thing's for certain though, at 0.4%, your current ISA should most certainly be switched as there are dozens of easy access ISAs paying significantly more. You can switch an ISA very easily so if rates do go up elsewhere you can always switch again. 

    Why 4.8%?
  • Bridlington1
    Bridlington1 Posts: 2,689 Forumite
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    Oasis1 said:
    There's very little doubt that interest rates will continue to go up in the current environment. The question is by how much. Whether or not you should fix at the moment is a question many would like to know the answer to and the truth is, no one knows. It fundamentally boils down to whether or not the average interest rate on an easy access ISA over the next 12 months will be greater than the current interest rate on the top paying 1 year fix. At the moment the top 1Y fixed rate ISA pays 3.9%, the top easy access pays 3%. A very rough rule of thumb would be, do you think that this time next year the top easy access ISA will pay more than 4.8%? If the answer is yes you are most probably better off with easy access, if you think the answer is no, you are most probably better off opting for a fix.

    One thing's for certain though, at 0.4%, your current ISA should most certainly be switched as there are dozens of easy access ISAs paying significantly more. You can switch an ISA very easily so if rates do go up elsewhere you can always switch again. 

    Why 4.8%?
    Top fixed rate pays 3.9%, top easy access currently pays 3%. The difference between them is 0.9%. If the top easy access rates average the current top 1 year fix over the next 12 months, you would expect to see the top easy access ISA paying 3.9% in 6 months time (an increase of 0.9%), and then rise another 0.9% over the 6 months after that. Thus the top easy access ISA would need to pay 1.8% more in 12 months time to match the current top 1Y fix. 3% + 1.8% yields 4.8%.

    Or to put it another way:
    (3% + future easy access rate)/2 = 3.9% ⇒ future easy access rate = 4.8%
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