We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
We're aware that dates on the Forum are not currently showing correctly. Please bear with us while we get this fixed, and see Site feedback for updates.

Fixed rates if another base rate increase?

For all the talk of the base rate now having peaked, given the 5-4 vote it seems to me that it would only take a small rise in inflation (or perhaps even no change) to tip the decision toward another 0.25% rise at the next decision point. I have an ISA that matures on 10th October so essentially need to decide whether to transfer to another one (or more) fixed rates then - if I felt the rates on offer weren't going to increase further - or otherwise move into easy access in the short term. It looks like a number of rates have dropped since the last BOE decision. If there *were* to be a base rate increase in November what do people think would be the effect on fixed-term isas on offer? Some better offers all round? Or better 1 year fixes, but little or no improvement in longer-term ones? Given the predicted direction of travel over the coming years I'm quite tempted by a 5 or 7 year fix. Taking compounding into account even a small difference in rate (in either direction) of course has greater impact over that kind of time period so I'm keen to be jumping at the right time!

Comments

  • kidwell25 said:
    For all the talk of the base rate now having peaked, given the 5-4 vote it seems to me that it would only take a small rise in inflation (or perhaps even no change) to tip the decision toward another 0.25% rise at the next decision point. I have an ISA that matures on 10th October so essentially need to decide whether to transfer to another one (or more) fixed rates then - if I felt the rates on offer weren't going to increase further - or otherwise move into easy access in the short term. It looks like a number of rates have dropped since the last BOE decision. If there *were* to be a base rate increase in November what do people think would be the effect on fixed-term isas on offer? Some better offers all round? Or better 1 year fixes, but little or no improvement in longer-term ones? Given the predicted direction of travel over the coming years I'm quite tempted by a 5 or 7 year fix. Taking compounding into account even a small difference in rate (in either direction) of course has greater impact over that kind of time period so I'm keen to be jumping at the right time!
    By no means am I an expert in this field but personally I would be wary of a 7 year fix, the longest I'm happy with (at this moment) is 2 years - this can and will change IF the rates begin to tumble.

    If you look at what has happened in the last 7 years both in Britain and globally - Brexit, the Covid pandemic, Ukraine, cost of living......who knows what the next few years could bring.

    I'd be inclined to do longer fixes when we have more concrete proof that the peak has been reached.
  • You could wait for October inflation figures but if they're lower as expected there's not likely to be any improvements in rates. I remember when I took out a fixed rate bond last December they were saying we had reached the peak and that was completely wrong so you never really know.
  • Actually I now realize there is a further complication as my current ISA is wih UBL and, reading their maturity letter, unless I instruct to the contrary the ISA will automatically reinvest into another 1 year fix (seems they don't do easy access). There is then a 14 day cooling off period, but no interest is earned during that period if the funds are transferred out. And if the transfer happens after the 14 days I'd be subject to early withdrawal charges. So essentially I either need to reinvest into another UBL fix or probably need to be looking at organising a transfer out imminently to ensure it happens after maturity but before the end of the cooling off period (and suck up the fact that I'll probably lose out on interest for a certain number of days). Seems far from ideal and makes me rather disinclined to remain with UBL despite the fact they're currently topping the 1 year table!
  • Albermarle
    Albermarle Posts: 25,990 Forumite
    10,000 Posts Sixth Anniversary Name Dropper
    kidwell25 said:
    Actually I now realize there is a further complication as my current ISA is wih UBL and, reading their maturity letter, unless I instruct to the contrary the ISA will automatically reinvest into another 1 year fix (seems they don't do easy access). There is then a 14 day cooling off period, but no interest is earned during that period if the funds are transferred out. And if the transfer happens after the 14 days I'd be subject to early withdrawal charges. So essentially I either need to reinvest into another UBL fix or probably need to be looking at organising a transfer out imminently to ensure it happens after maturity but before the end of the cooling off period (and suck up the fact that I'll probably lose out on interest for a certain number of days). Seems far from ideal and makes me rather disinclined to remain with UBL despite the fact they're currently topping the 1 year table!
    I vaguely remember something similar with a fixed rate maturing with Skipton. There appeared to be no easy access maturity option. However a more detailed look at the maturity options online, did reveal it was possible to do this, although it was not obvious. 
  • masonic
    masonic Posts: 25,570 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    I think it's been remarked by others that UBL is one provider that will only mature into another fix, which is ok given the cooling off period. Timing the transfer request for, say, 5 working days ahead and specifying it is actioned at maturity should minimise any loss of interest.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 348.4K Banking & Borrowing
  • 252.1K Reduce Debt & Boost Income
  • 452.4K Spending & Discounts
  • 240.9K Work, Benefits & Business
  • 617.3K Mortgages, Homes & Bills
  • 175.7K Life & Family
  • 254.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.