Raisin Fixed Rate Savings Bonds: will rate rise again?

macman

I've just had a fixed rate Raisin bond mature and now looking to reinvest for one year. The current best offer is 4.25% with Bank of Egypt. Does anyone think that rates on these will rise still further after the base rate increase (another 0.5% perhaps), or have we now hit a peak? Considering waiting until a week or so after the New Year, but of course in the meantime I'm getting no interest on the funds in the holding account.

Band7

Lots and lots do 4.25% for a 1 year fix. Whether any of them will offer better rates soon, I don't know.

Depending on the sized of your pot, and your willingness to open multiple accounts, there are many other options. Starting with the Barclays Rainy Day Saver which pays 5% on up to £5,000. There is also a range of Regular Savers paying between 4.5 and 7% but you are limited by the max amount you can deposit each month. I currently dripfeed £4,375 a month from a 3% easy access account into those accounts.

BTW, putting your cash into a savings account, of any sort, is saving, not investing. The two are entirely different things, with different T&Cs and different risk levels.

EthicsGradient

I got 4.5% at the end of October for a  1 year fix. So there's been a slight drop in offered rates since then; I'd suspect most of them had already priced in the 0.5% rise before it happened, and are more comparing what the moment-by-moment rate is now, compared with where they think it'll be in a year's time, which may well be "no more than now, or slightly lower". In which case you might be better off taking what you can now. Do you anticipate a use for the money from a year to 2 years, or are you more likely to put it into another 1 year fix then?

Johnjdc

Trends in Gilts and SONIA suggest they might tick back up slightly, but I wouldn't hold your breath - probably better to bag 4.3% now than wait if you're getting 0% - since if you wait for a month you need something more like 4.7% just to get the same result as going for 4.3% right now, and I'd personally say that's unlikely - more like 4.5% the best we'll see in the short term. If you were getting closer to 3% easy access on the holding account then it's more marginal!

macman

I could also dump the funds into their top Instant Access account at 2.7%, and that would minimise the loss of interest in the meantime, I can't see anything moving up before early January now.
Not looking to fix  beyond a one year term at present, I learned my lesson there by previously locking in for two years on these funds at sub-1%. 

macman

Best Raisin 1 year rate has now dropped to 4.2%. Pah!
He who hesitates is lost...

refluxer

macman said:

Not looking to fix  beyond a one year term at present, I learned my lesson there by previously locking in for two years on these funds at sub-1%. 

I did that too, but it's easy to forget that interest rates were heading (literally) to zero at the time and there was even talk about negative interest rates, where the concept of having to pay a bank to hold your money was a serious possibility.

It's a totally different saving environment at the moment though - rates have been climbing steadily throughout the year and, in November, hit levels not seen for decades.

Depending on the amount involved, one option is split the money into chunks and lock portions away at different times of the year and/or for different lengths of time, which evens things out and allows you to take advantage of the best rates available at the time, rather than having all your eggs in one basket. This is the strategy I adopted a long time ago and, considering the 2 year fix at a paltry rate that matures for me next March, one I'm pretty grateful for as I've had other fixed rates savers maturing this last year which has allowed me to take advantage of some far better rates.

I'm not sure why you're limiting yourself to accounts offered by Raisin  - as mentioned above, there are a number of accounts elsewhere paying 4.25% at the moment. Of those, I would recommend Atom if you're comfortable with an app-only bank.

RobM99

macman said:

Best Raisin 1 year rate has now dropped to 4.2%. Pah!
He who hesitates is lost...

Look before you leap - it's a rum do.

macman

refluxer said:

macman said:

Not looking to fix  beyond a one year term at present, I learned my lesson there by previously locking in for two years on these funds at sub-1%. 

I did that too, but it's easy to forget that interest rates were heading (literally) to zero at the time and there was even talk about negative interest rates, where the concept of having to pay a bank to hold your money was a serious possibility.

It's a totally different saving environment at the moment though - rates have been climbing steadily throughout the year and, in November, hit levels not seen for decades.

Depending on the amount involved, one option is split the money into chunks and lock portions away at different times of the year and/or for different lengths of time, which evens things out and allows you to take advantage of the best rates available at the time, rather than having all your eggs in one basket. This is the strategy I adopted a long time ago and, considering the 2 year fix at a paltry rate that matures for me next March, one I'm pretty grateful for as I've had other fixed rates savers maturing this last year which has allowed me to take advantage of some far better rates.

I'm not sure why you're limiting yourself to accounts offered by Raisin  - as mentioned above, there are a number of accounts elsewhere paying 4.25% at the moment. Of those, I would recommend Atom if you're comfortable with an app-only bank.

I'm not, but I already have funds in the Raisin holding account. Already invested in Atom, but not at 4.25% obviously. 

macman

I decided to go with Paragon via Raisin, one year at 4.2%, so only slightly down on what I could have got last week with BoE.