Saving rates

P933alilli

I wonder how far back savings rates will fall over the next few months and which ones will fall furthest shorter or longer duration ones? I'm hoping they'll stick around 3-5% but doubt it.

Bridlington1

Collyflower1 said:

I wonder how far back savings rates will fall over the next few months and which ones will fall furthest shorter or longer duration ones? I'm hoping they'll stick around 3-5% but doubt it.

Who's to say they will fall over the next few months? Fixed rate bonds may have stalled and in many cases dropped slightly but they could just as easily rise again. We do not know yet whether this small dip in rates is merely temporary or the start of a long term trend.

I think one factor at play here could be that a lot of people will have been holding off opening fixed rate accounts until the interest rate hit 4-5%, which they have done. So I imagine demand for 1Y fixes will have risen lately and thus many of the top rates have been pulled due to over-subscription.

t1redmonkey

I've personally put all the money I was 'reserving' for fixed rate bonds in them now (a couple of weeks ago).  Yes the trend seems to be that rates on longer bonds will decrease, but that may change again next year.  A lot depends on things like how inflation pans out, and if the BOE's current forecasts play out as they are anticipating or not.  If they don't see inflation coming down as much as they'd like, then they can easily send out more hawkish signals to the market and start more of these bigger rate hikes again. 

But as mentioned, that is not the current expectation, and BOE were doing the opposite (sending out dovish signals) at their last MPC meeting and I believe they literally said the market had "got it wrong" with where they think interest rates will go, hence why you've seen lots of these rates decreasing ever since that meeting.

RG2015

Just a few of my thoughts on savings rates. It is quite likely that they may not be correct but I am no expert. 

The goals of the banks and building societies are different to the goals of their customers. They need large deposits to fund their lending activities and maintain their liquidity. We want the best return on our deposits.

They will offer the lowest possible rates in order to entice customers. This may be for instant access or fixed rates for longer periods from 30 days to 5 years (and other variations). The rates would generally increase the longer the fix but uncertainty may mean the longer term rates may be beaten by the medium term rates.

Banks and building societies will be influenced by the BoE base rate, as this governs the rate they will be charged by the BoE if they choose to borrow from the BoE.

Everybody will be speculating how rates will move in the future, including Bond and other rates as well as the BoE rate. Everyone will also be acting independently in their own best interests.

The one thing I know for sure is that speculation on future rates is just that. Furthermore, the banks and building societies have far more experience than most customers on how the maximise their own benefits.

Albermarle

refluxer said:

Bobziz said:

Bacman said:

Savings rates are dependant upon what a financial institution is prepared to buy money for from investors, if they need an influx of cash and see an opportunity they will offer good rates to get the cash influx quickly and hope to make a good profit. Since the Budget last week, they have seen slow gains to be made (including in the housing market) so therefore pull out their offers on fixed rate bonds or reduce them.

Some banks/etc have reduced their offers by a fraction of a percent, some like Nationwide who offered 4.75% a fortnight ago have reduced to 3.5% now.

Whilst an increase in rates for savings can result in higher offers for fixed rate bonds, they are unrelated. As with all investments, only make them if you can afford to tie your money in for a period without access to it; also be happy with the rate you decided to accept whether it goes up or down in the future - that is the reality with any investments. Too easy to be greedy, remember at the start of the year rates for savings were only about 1.5% ?

Where are you seeing the NW reduction from 4.75 to 3.5 ? 4.75 still available on the website.

Yep - Nationwide's online bonds have been pretty static at 4% to 4.75% for 1 to 3 years for at least a month or so, so that statement wasn't right. It's their branch-only bonds that offer much lower rates, of which 3.5% (for 2 years) is one.

Nationwide generally have become more competitive than they have been for some time. Apart from this 3 year offer which is very close to being 'top of the table', they are increasing rates ( again) on many older accounts on Dec 1st .

lbudd

Alistair31 said:

Devastated? 

Yes ive got an app on my phone that "Dilibritly" miss spells words. Lol