Future of savings rates over the next 2 years

jaypers

We are certainly near the peak I suspect. I’m hedging my bets by laddering some smaller amounts into fixed savings accounts over the next few months. I also expect easy access rates to peak around 5% and for them to tail off as soon as we reach a point where BOE can start to reduce the base rate……not expecting this to happen until middle of 2024. 

RogerPensionGuy

My guess is the 🏦 of 🇬🇧 will get to 5.5% soon, possibly may get to in between 5.75% to 6.25% over the next 6/8 months.

Maybe stay in that 5.5% to 6% range for a protracted period.

They will be very cautious about when and how fast they ramp down rates, possibly a tiny reduction or two of 0.25% summer 2025.

Most stuff I read and watch leads me to guess we have caught sticky inflation in the UK and it has to be dealt with effectively, any hoping of rate reductions soon appears unlikely to me.

The average 🏦 of 🇬🇧 rate the last 300 years is about 5% and we are unlikely to see 10 or 12 years of 1% or that like again. 

Whatever happens, it will be interesting to watch.

Newbie_John

Also worth looking at fixed mortgages rates, banks are here to make money so they assume that savings rates should be lower:
a) best 2 year fix over 5.6%
b) best 3 year fix over 5.6%
c) best 5 year fix over 5.0%
d) best 10 year fix over 4.9%

So banks expect the rates to go down, not much though. Hard to predict 2+ years, but within two years some banks expect average savings to be below 5.6%.
 

bristolleedsfan

Newbie_John said:

Also worth looking at fixed mortgages rates, banks are here to make money so they assume that savings rates should be lower:
a) best 2 year fix over 5.6%
b) best 3 year fix over 5.6%
c) best 5 year fix over 5.0%
d) best 10 year fix over 4.9%

So banks expect the rates to go down, not much though. Hard to predict 2+ years, but within two years some banks expect average savings to be below 5.6%.
 

Also Nationwide BS made point last week reducing fixed mortgage rates due to swap rates continuing to reduce.

coastline

Swap rates can give clues. Maybe bookmark the links ?

The insider’s guide to Swap Rates and how they impact mortgage pricing | Financial Reporter

These can be set to chart view if that helps.?

GBP 2 Years IRS Interest Rate Swap Bond Historical Data - Investing.com UK

GBP 5 Years IRS Interest Rate Swap Bond Historical Data - Investing.com UK

artyboy

RogerPensionGuy said:

My guess is the 🏦 of 🇬🇧 will get to 5.5% soon, possibly may get to in between 5.75% to 6.25% over the next 6/8 months.

Maybe stay in that 5.5% to 6% range for a protracted period.

They will be very cautious about when and how fast they ramp down rates, possibly a tiny reduction or two of 0.25% summer 2025.

Most stuff I read and watch leads me to guess we have caught sticky inflation in the UK and it has to be dealt with effectively, any hoping of rate reductions soon appears unlikely to me.

The average 🏦 of 🇬🇧 rate the last 300 years is about 5% and we are unlikely to see 10 or 12 years of 1% or that like again. 

Whatever happens, it will be interesting to watch.

🏦 of 🏴󠁧󠁢󠁥󠁮󠁧󠁿. Fixed that for you.

(Lights touch paper. Retires. 🤣)

Andreg

Inflation will stick above 5% until the end of 2024, due to pressures of global energy prices, climate change related crop failures, Brexit related labour shortages and red tape.  So interest rates will rise steadily through 2024 to 7% / 8%.  The government will guarantee no new taxes on motoring or aviation because we need our cars and foreign holidays to take our mind off the increasing numbers of homeless and hungry here in the UK.  They might even subsidise energy again - future taxpayers will pay for that.

Albermarle

Andreg said:

Inflation will stick above 5% until the end of 2024, due to pressures of global energy prices, climate change related crop failures, Brexit related labour shortages and red tape.  So interest rates will rise steadily through 2024 to 7% / 8%.  The government will guarantee no new taxes on motoring or aviation because we need our cars and foreign holidays to take our mind off the increasing numbers of homeless and hungry here in the UK.  They might even subsidise energy again - future taxpayers will pay for that.

Strange then that the market seems to think that the chance of another 0.25% rise in September is about 50:50, and the chance of any more rises after that at around 20% probability only.

On the other side there seems little chance of them coming down again for quite a long time, to keep a lid on the inflationary pressures you mention.

boingy

I think we are close to peak rates but I also think rates will stay there or thereabouts for at least a year or two. Hard to say what effect a new UK govt will have but it will have an effect.

But none of us really know - we're just guessing

mebu60

jaypers said:

We are certainly near the peak I suspect. I’m hedging my bets by laddering some smaller amounts into fixed savings accounts over the next few months. I also expect easy access rates to peak around 5% and for them to tail off as soon as we reach a point where BOE can start to reduce the base rate……not expecting this to happen until middle of 2024. 

Ditto. I had another nibble at the NS&I 6.2% 1 year this morning.